Oil prices rise due to production outages after Hurricane Francine and expected inventory declines

Oil prices continued to rise as the market remains vigilant due to production concerns in the U.S. following Hurricane Francine and expectations of lower U.S. oil inventories. Brent crude futures for November increased by 16 cents or 0.2% to $72.91 per barrel. Simultaneously, U.S. crude futures for October climbed by 34 cents or 0.5% to $70.43 per barrel. Both contracts had already closed higher in the previous session as the lingering impacts of Hurricane Francine on production in the U.S. Gulf of Mexico overshadowed concerns regarding Chinese demand. This weak demand trend occurred ahead of the U.S. Federal Reserve’s interest rate decision this week, which might be positively received by investor sentiment in the oil sector. More than 12% of crude oil production and 16% of natural gas production in the U.S. Gulf of Mexico were offline as of Monday, according to the U.S. Bureau of Safety and Environmental Enforcement (BSEE). The market is focusing on the upcoming decision of the U.S. Federal Reserve regarding a rate cut. A lower interest rate would reduce borrowing costs and could potentially boost oil demand by supporting economic growth. "The growing expectations for an aggressive rate cut have improved sentiment in the commodity sector," ANZ analysts noted in a memo, adding that ongoing supply shortages are also supporting oil markets. Investors were also observing an anticipated decline in U.S. oil inventories, which, according to a Reuters poll, are expected to have fallen by about 200,000 barrels in the week ending September 13. However, lower-than-expected demand growth in China, the world's largest crude oil importer, has limited price increases. Chinese refinery output fell for the fifth consecutive month in August due to declining fuel demand and weak export margins, as indicated by government data on Saturday.