Energy
Tuesday, September 17th, 2024 3:49 pm EDT
Key Points
- Oil Prices and Production Disruptions: U.S. crude oil prices traded above $71 per barrel, influenced by ongoing disruptions in Gulf of Mexico production due to Hurricane Francine, which has kept more than 200,000 barrels per day offline.
- Federal Reserve Interest Rate Cut Expectations: There is growing optimism that the Federal Reserve will cut interest rates this week, which could positively impact oil demand. The market is anticipating this rate cut, although the extent is uncertain.
- Global Oil Market Trends: U.S. crude oil prices are down about 13% this quarter, and Brent crude has fallen around 15%, partly due to reduced demand in China and expected increased production from OPEC+ in December.
On Tuesday, U.S. crude oil prices traded above $71 per barrel, reflecting a combination of factors influencing the market. Prices rose due to disruptions in oil production caused by Hurricane Francine, which has impacted infrastructure in the Gulf of Mexico. Svetlana Tretyakova, a senior analyst at Rystad Energy, noted that these supply disruptions are significant, with more than 200,000 barrels per day still offline as of Monday due to the hurricane. The Bureau of Safety and Environmental Enforcement has indicated that production from unaffected facilities will resume once they pass safety checks.
Another contributing factor to the price increase is the growing anticipation of a Federal Reserve interest rate cut. Market expectations are leaning towards a rate reduction, which could boost oil demand by making borrowing cheaper and potentially stimulating economic activity. Despite these current gains, U.S. crude oil is down approximately 1% year-to-date, while Brent crude, the global benchmark, has decreased nearly 5% this year.
The broader oil market is also preparing for the Fed’s rate decision expected on Wednesday, with Wall Street uncertain about the extent of the rate cut. Additionally, the market faces downward pressure from sluggish demand in China, the world’s largest crude importer, and an anticipated increase in OPEC+ production in December. U.S. crude oil prices have fallen about 13% this quarter, and Brent has dropped around 15%. Tretyakova highlighted the bleak economic outlook in China, suggesting that the country may struggle to meet its growth targets for the year, further influencing global oil demand.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/17/crude-oil-prices-today.html
