Oil prices rise $1 on Gulf Coast storm as selling recovers Reuters

By Colleen Howe

BEIJING (Reuters) – Oil futures rose a dollar in early trade on Monday as a potential hurricane system approached the U.S. Gulf Coast and as markets recovered from a selloff following data from weaker than expected on US jobs on Friday.

West Texas Intermediate crude futures were up $1, or 1.48 percent, at $68.67 a barrel by 0146 GMT. Futures rose 99 cents, or 1.39 percent, to $72.05 a barrel.

Analysts said the pullback was partly a reaction to a potential hurricane on the US Gulf Coast.

A weather system in the southwestern Gulf of Mexico is forecast to become a hurricane before reaching the northwestern US Gulf Coast, the US National Hurricane Center said on Sunday. The US Gulf Coast accounts for about 60% of US refining capacity.

“Sentiment has recovered somewhat from last week’s selloff,” said independent market analyst Tina Teng.

At Friday’s close, Brent fell 10% for the week to its lowest since December 2021, while WTI fell 8% to its lowest since June 2023.

“posted its biggest weekly decline in 11 months amid a gloomy economic backdrop. Weak US jobs data raised concerns on Friday that demand for oil in the world’s biggest consumer has weakened,” analysts wrote ANZ in a client note.

A much-anticipated U.S. government jobs report showed nonfarm payrolls rose less than market watchers expected in August, rising by 142,000. This was the smallest gain since an all-out decline in December 2020.

A drop in the unemployment rate indicates the Federal Reserve will cut interest rates by just 25 basis points this month, rather than a half-point cut, analysts said.

Lower interest rates typically increase oil demand by boosting economic growth and making oil cheaper for holders of non-dollar currencies.

But weak demand continued to limit price gains.

Refining margins in Asia fell to their lowest seasonal levels since 2020 due to weak demand from the two largest economies. Fuel oil exports to the US Gulf Coast fell to their lowest level since January 2019 last month due to weaker refining margins.