Oil prices steady as Hurricane Beryl causes minimal damage
In a surprising turn of events, oil prices remained relatively stable on Tuesday following the impact of Hurricane Beryl on the US oil-producing hub in Texas. Despite initial concerns, the storm caused less damage than expected, easing worries over potential supply disruptions, as reported by Reuters.
Brent futures saw a slight increase of 4 cents, reaching $85.79 a barrel by 09:22 a.m. Saudi time, while US West Texas Intermediate crude also climbed 2 cents to $82.35.
Minimal impact on major refineries
Although oil refining activity slowed down and some production sites were evacuated, major refineries along the US Gulf Coast seemed to have weathered the storm with minimal impact. Hurricane Beryl weakened into a tropical storm after hitting the Texas coast, leading to a sense of relief in the market.
According to ING analysts Warren Patterson and Ewa Manthey, early assessments indicate that most energy infrastructure remains unharmed. This assessment, coupled with the lack of significant price movement in crude oil and refined fuel markets, suggests little concern about supply disruption from the hurricane.
Market focus shifts to the Middle East
The situation in the Middle East also remains a focal point for market participants, providing additional trading cues. Oil prices experienced a 1 percent decline on Monday amid hopes for a potential ceasefire deal in Gaza, which could alleviate concerns about global crude supply disruption.
While senior US officials engaged in talks in Egypt on Monday, tensions persisted between the parties involved. Hamas expressed concerns over a new Israeli incursion into Gaza, posing a threat to the potential agreement.
US inflation data and Federal Reserve expectations
In addition to geopolitical developments, market watchers are eagerly awaiting the release of key US inflation data. Federal Reserve Chair Powell is scheduled to testify before Congress on Tuesday and Wednesday, with expectations of an interest rate cut in September rising to about 80 percent due to recent soft labor market data.
IG market strategist Yeap Jun Rong highlighted the importance of upcoming inflation progress in supporting the broader risk environment, potentially stabilizing oil prices on a more positive demand outlook.
Support from Saudi crude exports
Market support also came from robust liftings of Saudi crude by Asian buyers on a contractual basis. August exports to China are expected to rise for the first time in four months, providing further stability to the oil market.