Gulf Coast Storm, Market Recovery Boost Oil Prices

9 Sep 2024 , 10:20 AM

Oil futures rose by a dollar in early trade on Monday as a potential hurricane system approached the United States Gulf Coast and markets recovered from a selloff triggered by weaker-than-expected US job data on Friday.

West Texas Intermediate crude futures increased $1, or 1.48%, to $68.67 per barrel. Brent crude futures were up 99 cents, or 1.39%, to $72.05 a barrel.

Analysts believe the bounce was caused in part by a potential hurricane off the United States’ Gulf Coast.

A meteorological system in the southwestern Gulf of Mexico is expected to intensify into a hurricane before reaching the northwestern Gulf Coast of the United States, the National Hurricane Centre warned Sunday. The Gulf Coast accounts for approximately 60% of US refining capacity.

Brent sank 10% this week to its lowest level since December 2021, while WTI lost 8% to its lowest closure since June 2023.

Highly anticipated U.S. government jobs data indicated that nonfarm payrolls expanded by 142,000 in August, less than market analysts had predicted. This was the weakest increase since an outright decrease in December 2020.

According to economists, a drop in the unemployment rate suggests that the Federal Reserve will lower interest rates by only 25 basis points this month, rather than a half-point cut.

Lower interest rates often enhance oil demand by boosting economic development and making oil cheaper for non-dollar holders.

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