Oil prices dropped on Friday as fears of damage on oil and gas infrastructure in the U.S. Gulf by Hurricane Rafael receded. China announced on Friday that its lawmakers agreed to raise the debt ceiling for local governments by $840 billion, a move aimed at stimulating economic growth. However, the market reaction was one of disappointment.
The decline in crude prices was largely due to these announcements. Investors had been hoping for a broader stimulus package that would include direct support for consumer spending.
Data shows crude imports in China fell 9% in October, the sixth consecutive month that imports by the world’s largest oil importer declined on a year-over-year basis.
Brent crude for January delivery was down 2.7% to trade at $73.76 a barrel at 11.40 am ET while WTI crude for December delivery fell 2.9% to trade at $70.28 per barrel.
“The weakening of oil imports in China is due to weaker demand for oil as a result of the sluggish economic development and rapid advance of e-mobility,” Commerzbank analyst Carsten Fritsch told reporters.
Oil markets witnessed choppy trading in Wednesday’s session, with oil prices declining in the intraday session before jumping after Donald Trump defeated Kamala Harris to clinch leadership of the White House.The mixed reactions by oil markets are not hard to decipher. On one hand, U.S. oil producers are looking forward to fewer regulations on crude production under a Trump presidency, meaning higher oil supply and consequently lower prices. On the other hand, a Trump win also means more sanctions on Iranian and Venezuelan barrels, potentially boosting prices..
The market anticipates that significant decisions regarding conflicts in Ukraine or the Middle East may be delayed until Donald Trump takes office, further easing concerns over immediate supply disruptions.
Whereas the ongoing hurricane season has contributed to large oil price rallies in recent months, the extreme weather is proving very costly for energy companies.
On Thursday, North Carolina giant electric utility, Duke Energy Corp, has provided estimates that the total cost to restore facilities damaged by Hurricanes Debby, Milton and Helene could fall in the range of $2.4 billion to $2.9 billion.
According to CEO Lynn Good, tens of thousands of the company’s customers were left without power after Helene ripped away transmission lines and power poles, but the company managed to restore 5.5 million outages during the “historic storm season”.
Duke Energy made the announcement during the company’s third quarter earnings call.
