By Ambar Warrick
Investing.com-- Oil prices rose slightly on Tuesday as markets weighed potential supply disruptions from Hurricane Ian, although a worsening outlook for crude demand kept prices pinned at near nine-month lows.
Major crude producers BP (LON:BP) PLC ADR (NYSE:BP) and Chevron Corp (NYSE:CVX) said that they had cut production at some offshore oil platforms in the Gulf of Mexico in anticipation of Hurricane Ian. Ian is now classified as a category two storm, and is expected to become a major hurricane within two days.
Other producers, including Occidental Petroleum Corporation (NYSE:OXY) and Hess Corporation (NYSE:HES), said they were monitoring the situation and implementing some measures, although it was unclear whether supply would be reduced.
Ian is expected to move across the Gulf of Mexico and make landfall in Florida later this week. The region accounts for about 15% of U.S. crude supply.
The prospect of some tightening in supply benefited oil prices, which have fallen sharply this month on concerns that rising interest rates will dent economic activity and slow crude demand.
London-traded Brent oil futures, the global benchmark, rose 0.5% to $83.20 a barrel, while U.S. West Texas Intermediate futures, the U.S. benchmark, rose 0.4% to $77.05 a barrel by 20:47 ET (00:47 GMT).
Both contracts plummeted nearly 4% each on Monday, rattled by a rapidly strengthening dollar and fears of a pronounced economic slowdown in Europe.
Oil prices are now headed for a 27% loss in the third quarter, as hawkish signals from the Federal Reserve and other central banks eroded the outlook for economic activity this year.
Still, mild gains in oil may indicate that near-term selling pressure on the space has eased, albeit momentarily. The dollar, which traded near 20-year highs on Tuesday, is expected to race even higher as the Fed keeps hiking interest rates.
Focus is now on an address by Fed Chair Jerome Powell, due later this week, for more cues on the path of U.S. monetary policy.
Oil prices have tumbled sharply this year from highs hit during the onset of the Russia-Ukraine war.
But a potential escalation in the conflict, as Russia mobilized more troops, could disrupt crude supply and support prices. The prospect of a harsh European winter could also shore up demand for heating oil.
Still, crude prices have to contend with growing concerns over slowing economic growth in the near-term, especially as global interest rates keep rising.