Oil prices dropped in the international market on Friday as traders overlooked supply disruptions from a hurricane in the US Gulf of Mexico just as moves by China to help its economy failed to impress some oil traders.
The global benchmark Brent crude futures fell by 2.3 percent or $1.76 to $73.87 per barrel while the US West Texas Intermediate (WTI) futures settled at 70.35 per barrel, down by 2.7 percent or $1.98.
In the world’s largest oil-producing country, the US, producers shut in more than 23 percent of oil output in the US Gulf of Mexico by Friday to brace against Hurricane Rafael.
According to the US National Hurricane Center’s latest advisory, the storm weakened to a Category 2 hurricane on Friday, and this eased worries and oil prices.
Meanwhile, concerns about China proved to be more than examined even as the government announced a package easing debt-repayment strains for local governments.
However, these measures do little to directly target demand as concerns about weakening demand in China, the world’s largest oil importer, have also contributed to the oil price decline after data showed crude imports in China fell 9 percent in October.
The weakening of oil imports in China is due to weaker demand for oil as a result of the sluggish economic development and rapid advance of electronic vehicles (EVs) in one of the most advanced economies.
Despite Friday’s losses, oil prices gained more than 1 per cent week-over-week taking support from the emergence of Mr Donald Trump as the next president of the US and the US Federal Reserve’s decision to cut interest rates by a quarter percentage point.
Oil producers are looking forward to fewer regulations on crude production under a Trump presidency, meaning higher oil supply and consequently lower prices.
On the flip side, a Trump administration also means more sanctions on Iranian and Venezuelan barrels, which could cut oil supply to global markets and potentially boost prices.