Crude oil futures jumped in Asian trade on Monday as a potential hurricane approached the U.S. Gulf Coast and markets recovered from a sell-off following weaker-than-expected U.S. jobs data on Friday.
U.S. West Texas Intermediate (WTI) crude futures rose 72 cents, or 1.06%, to $68.39 a barrel. Brent crude futures rose 71 cents, or 1%, to $71.77 a barrel.
Prices rose as much as a dollar in early Asian trading before retreating later. Analysts said the price rise was partly a reaction to a potential hurricane in the U.S. Gulf Coast.
The US National Hurricane Center said wind activity in the southwestern Gulf of Mexico was expected to develop into a hurricane before reaching the US Gulf Coast in the northwest. The US Gulf Coast is home to about 60% of the US’s oil refining capacity.
“Markets have recovered somewhat from last week’s sell-off,” said independent market analyst Tina Teng.
Brent closed Friday down 10% on the week to its lowest since December 2021, while WTI fell 8% to its lowest close since June 2023.
A report from the US Labor Department showed that the number of non-farm jobs in the United States rose by about 142,000 jobs in August, compared with economists’ estimates in a Reuters poll of 160,000 jobs. The report indicated that the July data was revised down to 89,000 jobs.
Analysts said the low unemployment rate suggests the US Federal Reserve may cut interest rates by only 25 basis points this month rather than a half-percentage point.
Lower interest rates should boost demand for oil by stimulating economic growth and making oil cheaper for holders of currencies other than the dollar. But weak demand has continued to limit price gains.
Refining margins in Asia fell to their lowest seasonal levels since 2020, due to weak demand from the world’s two largest economies.
On Sunday, Morgan Stanley analysts said in a note that “OPEC Plus’ announcement to postpone the start of its planned production increase by two months until the end of November indicates that the producer group remains focused on balancing the market.”
On Thursday, OPEC Plus announced in a statement that it would postpone increasing oil production for an additional two months until the end of next November, which was scheduled for the end of this month.
