Oil Prices Hold Steady Amidst Expectations of Increased Demand
Oil prices remained relatively stable on Tuesday, following a previous session where they saw an uptick due to expectations of higher fuel demand this summer. Investors, however, approached the market cautiously as they awaited US consumer price data, as reported by Reuters.
Market Details
Brent futures for August settlement saw a minor decrease of 5 cents to $85.96 a barrel by 8:40 a.m. Saudi time, after experiencing a 0.9 percent increase on Monday. Meanwhile, US crude futures were down 3 cents at $81.60 a barrel following a 1.1 percent climb the day before.
Both benchmarks saw a rise of about 3 percent last week, marking two consecutive weeks of gains.
Factors Driving the Market
With gasoline demand on the rise and oil and fuel stockpiles decreasing, the US, the largest oil consumer globally, is entering the peak summer consumption season.
A preliminary Reuters poll indicated that US crude oil stockpiles are expected to have fallen by 3 million barrels in the week to June 21, with gasoline stocks also anticipated to decrease while distillate inventories likely rose.
Independent market analyst Tina Teng noted, “The surge in oil prices was triggered by an optimistic demand outlook and reduced US inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months.”
Market Concerns
Despite the positive outlook, investors remain wary of potential further oil price increases due to concerns that high interest rates could limit growth in fuel consumption by impacting the economy.
Additionally, ongoing Ukrainian attacks on Russian oil infrastructure could disrupt crude and fuel supply, with recent drone strikes on refineries adding to the tension.
Global Developments
The European Union recently imposed sanctions against Russia over its actions in Ukraine, targeting vessels including those operated by Russian state-owned shipping firm Sovcomflot.
ANZ Research analysts highlighted, “The market remains on edge ahead of elections in Iran later this week. A more hard-line president could result in more direct confrontations with the US, Israel and Saudi Arabia.”