Oil Daily | Gulf of Mexico Oil Output Hit by Disruptions, China Demand Concerns Persist

【Global Oil Supply and Demand】

Trader pessimism about Chinese oil demand continued after China's underwhelming stimulus package announcement. Analysts expect more pro-consumption measures in upcoming economic meetings. Vitol's head of research highlighted petrochemicals as the future driver of oil demand in China, with growth anticipated to satisfy global plastic demand, replacing transport as the main source.

Over a quarter of U.S. oil production in the Gulf of Mexico remains offline after Hurricane Rafael weakened. Despite the storm's downgrade, 480,000 bpd in oil production capacity was halted. Inspections are underway, but Chevron has begun restoring production. Rafael formed as the 17th storm this hurricane season, posing significant disruptions.

【Oil-Producing Countries Dynamics】

Russia may consider creating a massive state oil company by combining Rosneft, Gazprom Neft, and Lukoil assets. Although dismissed by Rosneft and Lukoil officials, the merger could boost resilience to U.S. sanctions. Russia aims to reduce oil and gas revenue dependency, currently declining significantly, partly due to lower market prices.

【Others】

U.S. oil production suffered the worst disruption this season from Hurricane Francine, with Rafael potentially the second most disruptive. The Energy Information Administration anticipated significant storm activity, warning of potential havoc on the oil and gas industry, a prediction that has so far proven inaccurate.