Oil prices edged lower on Tuesday as weak demand from China countered supply disruptions caused by Tropical Storm Francine. Brent crude futures dropped 4 cents, or 0.06%, to $72.80 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 10 cents, or 0.15%, to $68.60 per barrel. Both benchmarks had gained roughly 1% in Monday’s session.
The U.S. Coast Guard ordered the closure of operations at several small Texas ports, including Brownsville, on Monday night as Tropical Storm Francine intensified over the Gulf of Mexico. While the port of Corpus Christi remained operational, it faced restrictions. The storm is expected to become a hurricane, according to forecasts from the National Hurricane Center (NHC).
Major oil companies, including ExxonMobil, Shell, and Chevron, responded to the approaching storm by shutting down offshore production platforms, putting at least 125,000 barrels per day of oil capacity at risk. This was confirmed in a note by ANZ analysts, which cited data from the NHC.
Despite these supply concerns, oil prices remain under pressure due to signs of weakening global demand. China’s latest economic data, released on Monday, showed rising consumer inflation in August but ongoing fragility in domestic demand. Meanwhile, producer price deflation worsened, further dampening the outlook for oil consumption in the world’s largest crude importer.
The bearish sentiment extends beyond China, with concerns about slowing U.S. demand and persistent global oversupply. ANZ noted that money managers are now the least bullish on crude prices in over 13 years. Additionally, global traders like Gunvor and Trafigura have projected oil prices to fluctuate between $60 and $70 per barrel, driven by weaker Chinese demand and an oversupplied market.
Investors will be closely monitoring the upcoming monthly oil market report from the Organization of the Petroleum Exporting Countries (OPEC) for further insights into global market trends.