Oil Prices Rise
Crude oil futures have seen an uptick on Wednesday morning following concerns over potential supply disruptions caused by Tropical Storm Francine in the Gulf of Mexico. This marks a recovery from Tuesday’s low, which was the lowest since December 2021.
As of 9:57 AM, November Brent crude futures were trading at $69.60, up by 0.59%, while October West Texas Intermediate (WTI) futures were at $66.08, up by 0.50%. In the Indian market, September crude oil futures on the Multi Commodity Exchange (MCX) were trading at ₹5,564, up by 0.56% from the previous close, and October futures were at ₹5,548, up by 0.63%.
Storm Francine’s Impact
Tropical Storm Francine has intensified into a Category 1 hurricane and is expected to make landfall in Louisiana. The storm poses a threat to refinery operations in the Gulf region, contributing to the rebound in oil prices as traders anticipate potential disruptions to supply.
OPEC’s Revised Demand Forecast
The Organization of the Petroleum Exporting Countries (OPEC) has revised its global oil demand growth forecast for 2024 slightly down to about 2 million barrels per day, still above the historical average of 1.4 million barrels per day seen before the COVID-19 pandemic. The forecast for 2025 has been adjusted down by 40,000 barrels per day to 1.7 million barrels per day.
Despite these revisions, OPEC’s demand growth projections remain robust compared to the International Energy Agency’s (IEA) expectations of approximately 1 million barrels per day for the same periods. OPEC’s output fell by 197,000 barrels per day in August to 26.59 million barrels per day, largely due to production stoppages in Libya.
Market Reactions and OPEC+ Concerns
The recent drop in oil prices, with ICE Brent falling 3.69% to just over $69 a barrel on Tuesday, has raised concerns within OPEC+. The group may need to announce new policies to address the anticipated surplus in 2025. There is also speculation that OPEC+ might reconsider its output cuts if the market continues to weaken, potentially leading to increased production and further price declines. This would likely put pressure on OPEC members to pump more oil to maintain revenue amid lower prices.
Other Commodities
Natural Gas: September natural gas futures on the MCX were trading at ₹187.90, down by 0.42% from the previous close.
Jeera: September jeera contracts on the National Commodities and Derivatives Exchange (NCDEX) were trading at ₹25,590, up by 0.93%.
Turmeric: October turmeric futures on NCDEX were trading at ₹14,044, down by 0.88% from the previous close.
