Oil prices fell on Tuesday, influenced by weak demand from China which outweighed supply disruptions in the U.S. caused by Tropical Storm Francine. Brent crude futures dropped by 32 cents (0.45%) to $71.51 a barrel, while U.S. West Texas Intermediate (WTI) crude fell by 38 cents (0.55%) to $68.33 a barrel.
Despite both benchmarks rising around 1% on Monday, the market faced pressure from ongoing concerns about global oil oversupply. The U.S. Coast Guard had ordered the closure of operations at Brownsville and other small Texas ports due to the storm, with Corpus Christi remaining open under restrictions. The storm is expected to strengthen and was anticipated to become a hurricane.
Exxon Mobil and Shell reported shutdowns of their offshore production platforms, with analysts estimating that at least 125,000 barrels per day of oil capacity could be disrupted. However, signs of weakening global demand, particularly from China, continued to weigh heavily on the market.
Recent data indicated a fragile domestic demand in China, despite a rise in consumer inflation and a notable increase in exports. Year-to-date crude imports in China are trailing last year’s figures by over 3%, reinforcing concerns about demand.
Market participants are also awaiting the monthly oil market report from OPEC and the U.S. Energy Information Administration’s short-term energy outlook, which could provide further insights into global oil supply and demand dynamics.
Global traders expect oil prices to remain between $60 and $70 per barrel, influenced by China’s subdued demand and persistent oversupply in the market.