About 2,5 weeks ago, oil was still above $80 per barrel. Now the oil price has fallen below $70. This week, OPEC revised down its forecast for global oil demand. Despite a quarter of the drilling platforms and other oil facilities in the Gulf of Mexico being closed due to Hurricane Francine, oil is at its lowest level in almost three years.
Lack of demand has been a bearish factor for oil for some time now. Both China and the US recently released disappointing figures. Oil cartel OPEC released its monthly report on Tuesday, September 10, in which it slightly revised downwards its forecast for global oil demand for both 2024 and 2025. For 2024 by 80.000 barrels per day to around 2 million barrels per day and for 2025 by 40.000 barrels to 1,7 million per day.
The total is still more than the pre-corona average of 1,4 million barrels per day, the oil cartel notes. But the market clearly does not know how to put it into perspective, because the Brent benchmark fell below $70 ($69,19) on Tuesday after the publication of OPEC's forecasts. 2,5 weeks ago (on August 26), oil was still well above $80 ($81,43).
A quarter of Gulf of Mexico oil production at a standstill
Oil prices rose slightly again after Storm Francine reached hurricane strength on Tuesday and has been battering the southern coast of the United States since then. 23,55% of oil production in the Gulf of Mexico (see photo above this article) has been scaled back since Tuesday, the US government agency BSEE (Bureau of Safety and Environmental Enforcement) reports. In absolute numbers, this amounts to 412.070 barrels per day.
After the storm passes, the facilities will be inspected. After that, the undamaged facilities can resume operations. Facilities that sustained damage may take longer to get back up and running, the BSEE said. Several oil terminals at ports were also closed due to the hurricane.
During Wednesday afternoon, the oil price continued to fall. The publication of the weekly report of the American Energy Agency EIA on the American oil inventories on Wednesday afternoon was a factor in this. The oil inventories have increased by 0,8 million barrels. That is less than expected. The American commercial crude oil inventories are now 419,1 million barrels and that is about 4% below the five-year average for this time of year. At the time of writing (Wednesday afternoon 17:00), oil is trading at $69,27.