Crude oil futures ended sharply higher on Tuesday as news about stoppage of energy operations in the Gulf of Mexico due to Hurricane Sally outweighed concerns about outlook for energy demand.
The hurricane is reportedly approaching the northern U.S. Gulf Coast, causing disruption to oil and natural gas production.
According to reports, the Bureau of Safety and Environmental Enforcement estimates nearly 27% of Gulf oil production and about 28% of natural gas production have been shut as of now. That’s about 5.3% and 2.7% more than Monday’s levels.
West Texas Intermediate Crude oil futures for October ended up $1.02 or about 2.7% at $38.28 a barrel, after being down at $37.06 a barrel earlier in the day.
Brent crude futures were up more than $0.90 or about 2.5% at $40.59 a barrel.
Strong industrial production and retail sales data from China, and a report showing an improvement in German business confidence also appeared to be pushing up crude oil prices.
After OPEC lowered the energy demand forecast for the current year and 2021 on Monday, the International Energy Agency (IEA) has now trimmed its outlook for energy demand for the year.
The IEA, in his report, has trimmed its outlook by 200,000 barrels per day to 91.7 million barrels per day, citing uncertainty about the pace of economic recovery.
OPEC had lowered its oil demand forecast for the year, saying demand will fall by about 9.46 million barrels per day. In July, OPEC had said it expects demand to fall by 9.06 million barrels per day.
Traders were also looking ahead to weekly inventory reports from American Petroleum Institute (API) and U.S. Energy Information Administration (EIA). While the API’weekly oil report is due later today, the EIA’s is scheduled to release its inventory data Wednesday morning.