Oil futures surged by over a dollar in early Monday trading as a potential hurricane approached the U.S. Gulf Coast and markets began recovering from Friday’s selloff, which followed weaker-than-expected U.S. jobs data.
West Texas Intermediate (WTI) crude futures rose by $1, or 1.48%, to $68.67 per barrel by 0146 GMT, while Brent crude futures increased by 99 cents, or 1.39%, to $72.05.
Analysts noted that part of the price recovery was due to concerns over the developing hurricane in the U.S. Gulf Coast. The U.S. National Hurricane Center warned that a weather system in the southwestern Gulf of Mexico could intensify into a hurricane before reaching the northwestern Gulf Coast, which holds around 60% of U.S. refining capacity.
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Independent market analyst Tina Teng mentioned that “sentiment recovered somewhat” after the previous week’s selloff. On Friday, Brent crude had dropped 10%, marking its lowest since December 2021, while WTI fell 8%, hitting its lowest level since June 2023.
The drop was fueled by a gloomy economic outlook. Weak U.S. jobs data raised concerns about slowing oil demand, as nonfarm payrolls grew by only 142,000 in August—below expectations—and the July figure was revised downward to 89,000, the smallest increase since December 2020.
Despite the jobs data suggesting that the Federal Reserve might only cut interest rates by 25 basis points rather than 50, weak demand continues to limit significant price gains.
In Asia, refining margins have dropped to their lowest seasonal levels since 2020, and U.S. fuel oil exports from Asia hit their lowest point since January 2019 last month, reflecting softer refining margins.
