Oil prices edge up as storm approaches US Gulf Coast after week of heavy losses
U.S. Gulf Coast hurricane forecast supports prices
Libyan supply disruption helps, but demand concerns linger
Morgan Stanley cuts fourth-quarter Brent price forecast
Adds latest prices
By Scott DiSavino
NEW YORK, Sept 9 (Reuters) - Oilprices rose about 1% on Monday on concerns that ahurricane forecast to hit Louisiana on Wednesday willdisrupt production and refining along the U.S. Gulf Coast.
Brent <LCOc1> futures were up 78cents, or 1.1%, to settle at$71.84 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained $1.04, or 1.5%, to settle at$68.71.
On Friday, Brent and U.S. diesel futures HOc1 closed at their lowest prices sinceDecember 2021. WTI closed at its lowest price sinceJune 2023 and U.S. gasoline futures RBc1 closed at their lowest level sinceFebruary 2021.
In the U.S., oil and gas producers along the Gulf Coast started evacuating staff and curbing drilling to prepare for Tropical Storm Francine as it churned across the Gulf of Mexico.
TheU.S. National Hurricane Center projected Francine will strengthen into a hurricane onTuesday before hitting the Louisiana coast. The Gulf Coast accounts for about 50% of the country's refining capacity, according to the U.S. Energy Information Administration (EIA).
"A small recovery in prices is under way ... inspired by hurricane warnings that might threaten the U.S. Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do," said John Evans, an analyst at PVM.
OPEC+ includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia.
In Libya, an OPEC member, the country's National Oil Corp declared force majeure on several crude cargoes loading from the port of EsSider, with oil production curtailed by a political standoff over the central bank and oil revenue.
The OPEC+ oil producer group has agreed to delay a planned output increase of 180,000 barrels per day for October by two months in reaction to tumbling crude prices.
Analysts said investor optimism about a soft landing scenario for the U.S. economy, in which inflation is tamed without a recession or sharp rise in unemployment, also helped support crude prices. The U.S. government is due to release a crucial inflation report later this week.
"A U.S. recession is not inevitable, but the Federal Reserve needs to start cutting interest rates quickly and aggressively to avoid one," according to James Knightley, chief international economist at ING.
U.S. central bank policymakers have signaled they are ready to kick off a series of interest rate cuts at the Fed's Sept. 17-18 policy meeting,noting a cooling in the labor market that could accelerate into something more dire in the absence of a lower borrowing costs.
Lower rates can boost economic growth and demand for oil. The Fed hiked rates aggressively in 2022 and 2023 to tame a surge in inflation.
BEARISH FORECASTS
But not everyone is bullish about crude prices.
Morgan Stanley cut its Brent price forecast for the fourthquarter to $75 a barrel from $80, noting prices were likely to remain around that level unless demand weakens further.
Global commodity traders Gunvor and Trafigura said they anticipateoil may trade in a rangebetween $60 and $70 per barrel due to sluggish demand from China and persistent global oversupply.
China's shift towards lower-carbon fuels and a sluggish economy are dampening oil demand growth in the world's largest crude importer, according to speakers at the APPEC energy conference.
Refining margins in Asia have slipped to their lowest seasonal levels since 2020.
Reporting by Scott DiSavino in New York, Robert Harvey in London and Colleen Howe in Beijing; Additional reporting by Arunima Kumar in Bengaluru; Editing by David Goodman, Mark Potter, Ros Russell and Paul Simao
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