By Adedapo Adesanya
Oil prices dropped more than 2 per cent on Friday as traders overlooked supply disruptions from a hurricane in the US Gulf of Mexico just as moves by China to help its economy failed to impress some oil traders.
During the session, Brent crude futures fell by 2.3 per cent or $1.76 to $73.87 per barrel and the US West Texas Intermediate (WTI) futures settled at 70.35 per barrel after it shed 2.7 per cent or $1.98.
In the world’s largest oil-producing country, the US, producers shut in more than 23 per cent of oil output in the US Gulf of Mexico by Friday to brace against Hurricane Rafael.
However, the latest forecasts on trajectory and intensity reduced the risks Hurricane Rafael poses to oil production.
According to the US National Hurricane Center’s latest advisory, the storm also weakened to a Category 2 hurricane on Friday, and this eased worries and prices.
Meanwhile, concerns about China proved to be more than examined even as the government announced a package easing debt-repayment strains for local governments.
These measures do little to directly target demand, market analysts noted.
Concerns about weakening demand in China, the world’s largest oil importer, have also contributed to the oil price decline after data showed crude imports in China fell 9 per cent in October.
The weakening of oil imports in China is due to weaker demand for oil as a result of the sluggish economic development and rapid advance of electronic vehicles (EVs).
Despite Friday’s losses, oil prices gained more than 1 per cent week-over-week taking support from the emergence of Mr Donald Trump as the next president of the US and the US Federal Reserve’s decision to cut interest rates by a quarter percentage point.
Oil producers are looking forward to fewer regulations on crude production under a Trump presidency, meaning higher oil supply and consequently lower prices.
On the flip side, a Trump administration would also mean more sanctions on Iranian and Venezuelan barrels, which could cut the oil supply to global markets and potentially boost prices.
During his first term in office, President-elect Trump tore up the Iran nuclear agreement, known then as the Joint Comprehensive Plan of Action (JCPOA), and re-imposed sanctions on Iran’s oil industry and exports.
There have been suggestions that he could seek a maximum pressure policy, which could stifle Iranian oil exports that had just hit a six-year high earlier this year.