Brent gained 16 cents Friday to trade at $80 a barrel in mid-day trading Friday. WTI rose 53 cents to $71.
Just a week ago, Brent prices hit $86 a barrel, the highest price in nearly four years.
There are also signs that demand is dropping as U.S. crude oil stockpiles rose 6 million barrels while gasoline inventories rose by 1 million barrels.
Looking worldwide, the International Energy Agency cut global oil demand growth by 100,000 barrels per day. Global oil supplies are expected to grow by 2.2 million barrels per day.
The IEA also warns that with Brent prices “established” above $80 a barrel, “expensive energy is back, with oil, gas and coal trading at multi-year highs, and it poses a threat to economic growth,” IEA said.
“Global oil supply is growing at a relentless pace, even as Venezuelan production deteriorates and Iranian flows decline ahead of U.S. sanctions,” the IEA said.
The rapid selloff on Wall Street exacerbates fears that oil demand will be weaker as trade tensions increase, said Andrew Lipow, president at Lipow Oil Associates. If traders are going to offload anything during a selloff, it’s going to be crude oil.
Lipow believes the U.S. sanctions on Iran will push prices back up as Nov. 4 nears.
Paul Ciana, a technical strategist with Bank of America Merrill Lynch, said Brent could top $92 a barrel while WTI could reach $85 a barrel.
“In an overbought pullback that seems to have just begun, we would consider buying Brent in the $77s and WTI in the $69s,” Ciana said in a research note.
Hurricane Michael passes, time to drill again
Hurricane Michael leveled coastal areas in the Florida Panhandle, left 1.5 million customers without electricity and killed eight people. But the Category 4 — nearly Category 5 — storm had little impact on crude oil or gasoline prices.
Offshore oil drillers shut in 700,000 barrels per day worth of production as a precaution before the hurricane. But Michael’s track took it east of much of the production sights, meaning oil production should be back online quickly.
“We expect the impact on refined products demand to be below that of previous hurricanes in the Gulf Coast such as Harvey in 2017, as the region impacted by Michael has lower population density than Houston … Nevertheless, the impacts are favoring the high side of our estimates given the sheer severity of the storm,” said Claudio Galimberti, Head of Demand and Refining at S&P Global Platts Analytics.
Platts Analytics estimates the cumulative lost oil production from Hurricane Michael for October will be 90,000 to 100,000 barrels per day.