09:00 AM EDT, 09/12/2024 (MT Newswires) -- Oil prices strengthened for a second session early on Thursday, boosted by the supply cuts caused by Hurricane Francine's path through the Gulf of Mexico, while the International Energy Agency warned demand growth continues to wane as China's economy slows.

West Texas Intermediate crude oil for October delivery was last seen up $0.93 to to US$68.24 per barrel, while November Brent crude, the global benchmark, was up US$0.86 to US$71.47.

Prices fell to the lowest in more than three years earlier in the week, with the market dominated by concerns over the prospects for economic slowdowns in China and the United States. However, now more than a third of gulf oil production is shut in because of the storm, which made landfall in Louisiana on Wednesday, returning the focus to tight supply.

The Bureau of Safety and Environmental Enforcement, the U.S. offshore regulator, yesterday reported 171 producing platforms were evacuated because of Francine, shutting in 674,833 barrels per day of oil production, 39% of Gulf output.

"Brent crude trades back above USD 71 after finding support near USD 69 in the prior two sessions, supported by Hurricane Francine, which is temporarily impacting crude-production regions in the Gulf of Mexico. Whether a low has been established following heavy losses earlier this month amid technical selling and recession fears is too early to say," Saxo Bank noted.

In its influential monthly Oil Market Report, the IEA again trimmed its forecast for 2024 demand growth, cutting its forecast by 70,000 barrels per day to about 0.9-million barrels per day over 2023 demand. The agency said demand in China declined for a fourth-straight month, falling by 280,000 bpd.

"The country's oil demand is now set to expand by only 180 kb/d in 2024, as the broad-based economic slowdown and an accelerating substitution away from oil in favor of alternative fuels weigh on consumption," the report noted. "Surging EV sales are reducing road fuel demand while the development of a vast national high-speed rail network is restricting growth in domestic air travel."

The IEA is the third and last of the three main international forecasting agencies to lower its demand forecast this week, with OPEC and the Energy Information Administration already having cut their outlooks for 2024 growth.