Oil Prices Steady Amidst Supply Concerns and Weak Demand
In the tumultuous world of oil trading, prices managed to find some stability on Tuesday after two consecutive days of decline. Investors treaded cautiously, keeping an eye on the abundance of supplies and lackluster demand, while shrugging off the political drama unfolding in the US presidential campaign, as reported by Reuters.
The Brent crude futures for September inched up by 11 cents to reach $82.51 per barrel by 09:45 a.m. Saudi time. Meanwhile, US West Texas Intermediate crude for September saw a modest increase of 5 cents, reaching $78.45 per barrel.
Despite US President Joe Biden’s surprising decision to withdraw from the reelection race and endorse Vice President Kamala Harris on Sunday, traders seemed unfazed. Analysts at Citi downplayed the impact of the political shakeup on oil and gas policies, predicting minimal disruption from either Harris or Republican nominee Donald Trump.
Market attention remained fixated on the fundamentals, with analysts from Morgan Stanley anticipating a delicate balance in the market by the fourth quarter. However, concerns loomed over a potential supply surplus in the coming year, which could push Brent prices down to the mid-to-high $70s per barrel range.
According to Priyanka Sachdeva, senior market analyst at Phillip Nova, any slight rise in oil prices was merely a result of market consolidation and opportunistic buying. Sachdeva warned that a deteriorating demand outlook, coupled with a resolution in Gaza, could trigger a further slump in oil prices, especially in light of the increase in US inventories observed last week.
The American Petroleum Institute is set to unveil its estimates for last week’s oil inventories on Tuesday, followed by official US government data on Wednesday. Initial projections from a Reuters poll suggested a 2.5 million barrel decrease in US crude stocks and a 500,000 barrel decline in gasoline stocks for the week ending July 19.
Meanwhile, eyes are also on Russia as the country’s largest Black Sea oil refinery, Tuapse, suffered damage from a significant drone attack launched by Ukraine. While the extent of the damage remains unclear, the incident could impact refined product prices due to reduced output, although it may have a bearish effect on crude oil prices by increasing crude oil availability for export, according to ING market strategists.