Oil prices rose on Friday, extending a rally sparked by output disruptions in the U.S. Gulf of Mexico, where Hurricane Francine forced producers to evacuate platforms before it hit the coast of Louisiana.
Brent crude oil, against which Nigerian crude oil is priced, rose by 34 cents, or 0.5%, to $72.31 per barrel while U.S. West Texas Intermediate crude futures rose by 38 cents, or 0.6%, to $69.35 a barrel.
If those gains hold, both benchmarks will break a streak of weekly declines, despite a rough start that saw Brent crude dip below $70 a barrel on Tuesday for the first time since late 2021. At current levels, Brent is set for a weekly increase of about 1.7%, and WTI is set to gain over 2%.
Oil producers assessed damages and conducted safety checks on Thursday as they prepared to resume operations in the U.S. Gulf of Mexico, as estimates emerged of the loss of supply from Francine.
UBS analysts forecast output in the region in September will fall by 50,000 barrels-per-day (bpd) month-over-month, while FGE analysts estimated a 60,000 bpd drop to 1.69 million bpd.
The supply shock helped oil prices recover from a sharp selloff earlier in the week, with demand concerns dragging benchmarks to multi-year lows.
Both the Organization of Petroleum Exporting Countries and the International Energy Agency this week lowered their demand growth forecasts, citing economic struggles in China, the world’s largest oil importer.
A shift towards lower-carbon fuels is also weighing on China’s oil demand, speakers at the APPEC conference said this week.
Official data showed nearly 42% of the region’s oil output was shut-in as of Thursday.
China’s crude oil imports averaged 3.1% lower this year from January through August compared to the same period last year, customs data showed on Tuesday.
“Flagging domestic oil demand in China has become a hot topic and was further underlined by disappointing August trade data,” FGE analysts said in a note to clients.
Demand concerns have grown in the United States as well. U.S. gasoline and distillate futures traded at multi-year lows this week, as analysts highlighted weaker-than-expected demand in the top petroleum consuming country.