Oil prices have declined after US tropical storm Gordon had a lower than expected impact on oil production in the Gulf Coast.
US West Texas Intermediate (WTI) crude futures went down 73 cents, or 1%, to trade at $69.14 a barrel, while international Brent crude futures decreased 60 cents, or 0.8%, to reach $77.57, Reuters reported.
Operators evacuated dozens of oil and gas platforms in the Gulf of Mexico ahead of the storm, resulting in an increase of oil prices. The threat to platforms on the western side of the Gulf, however, eased after Gordon had shifted eastward and was found to be weakening.
Oanda Asia-Pacific trading head Stephen Innes told the news agency that many crude futures traders were ‘caught long and wrong over the past 24 hours due to the tropical storm buying frenzy’, adding that ‘prices pulled back considerably as the magnitude of the storm suggests production losses will be limited’.
Meanwhile, a typhoon lashed Japan’s east coast, causing some damage to oil refineries in the Osaka region. Operator JXTG reportedly confirmed that its operations were not significantly affected by the typhoon.
Innes added that the price outlook for crude was still bullish, primarily due to impending US sanctions on Iran.
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He said: “With the anticipation of up to 1.5 million barrels per day affected by the US sanctions on Iran, one would expect prices to move higher in the weeks ahead.”
Other analysts express caution on the potential risks to oil demand, especially in emerging markets experience economic turmoil.
In the recent months, factors such as inflation, a strong US-dollar and spiralling global trade wars have weighed on the currencies and stock markets of emerging markets, including Turkey, Argentina, Indonesia and South Africa. Emerging markets play a significant role in fuelling global oil demand growth.