Oil (CL=F, BZ=F) prices surged in Wednesday's trading session amid worries that Hurricane Francine would disrupt US production in the offshore region for an extended period. Tortoise senior portfolio manager and managing director Rob Thummel joins Market Domination to discuss the movement and the overall state of the oil market.

Thummel notes that some production has been shut down in the Gulf of Mexico due to the hurricane. This production area amounts to half a million barrels per day, which will take some supply off the market and drive prices higher.

However, he notes that the larger issue at hand is that oil appears "disconnected from the fundamentals."

"Obviously there's not a lot of positive sentiment toward oil prices right now... Demand has come down a little bit, but still, oil demand is still going to be at least a million barrels a day, maybe more than that, globally, as far as growth is concerned," Thummel tells Yahoo Finance. He draws attention to the fact that OPEC+ has decided to keep additional supply off the market, keeping supply "constrained." He argues that fundamentally, "oil looks pretty good," despite its price challenges.

He highlights that the global energy demand is increasing, and is on track to set record highs both for this year and 2025. However, Chinese demand is lower despite the nation being one of the largest consumers in the world. While Thummel sees this as "concerning," he notes that the US, Saudi Arabia, and other emerging markets are starting to consume more oil, which will offset some of the weak demand from China.

In addition, he argues that "Chinese demand may be surprised to the upside" in the second half of 2024. While it may not be at its historical levels, he believes it could come in higher than currently expected. If that happens to be the case, he estimates Brent prices to hover around the high $70s to low $80s by the end of the year.

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This post was written by Melanie Riehl