Oil hardly changed amid easing worry about hurricane damage
Price slip after damage from Hurricane Beryl is less severe than expected
09 July 2024 - 08:02
byColleen Howe and Trixie Yap
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Singapore — Oil prices slipped on Tuesday, extending losses from the previous session, after a hurricane that hit a key US oil-producing hub in Texas caused less damage than markets had expected, easing supply concerns.
Brent futures fell 22c to $85.53 a barrel by 3.21am GMT, while US West Texas Intermediate (WTI) crude fell 24c to $82.09.
“There has been some unwinding in oil prices in today’s session, as market participants look for potential progress in ceasefire negotiations on the Middle East front, while the impact of Hurricane Beryl on supplies disruption has been more limited than what was initially expected,” said IG market strategist Yeap Jun Rong.
Though oil refining activity slowed and some production sites were evacuated, major refineries along the US Gulf Coast appeared to see minimal effect from Hurricane Beryl, which weakened into a tropical storm after hitting the Texas coast.
“Early indications suggest that most energy infrastructure has come through unscathed,” said ING analysts Warren Patterson and Ewa Manthey in a client note, adding that price action in crude oil and refined fuel markets reflect little concern on supply disruption from the hurricane.
That eased market worries about the risk of supply disruption in Texas, where 40% of US crude oil is produced.
Major oil-shipping ports around Corpus Christi, Galveston and Houston had been shut ahead of the storm. The Corpus Christi Ship Channel reopened on Monday and the Port of Houston was projected to resume operations on Tuesday afternoon.
Several key refiners such as Marathon Petroleum were also preparing to restart their refining units.
Market participants are also keeping an eye on the situation in the Middle East for more trading cues. Oil prices settled down 1% on Monday amid the hope a possible ceasefire deal in Gaza could reduce worries about global crude supply disruption.
Senior US officials were in Egypt for talks on Monday, but gaps remained between the two sides, the White House said, and Hamas said a new Israeli push into Gaza threatened the potential agreement.
Markets were also waiting for the release of key US inflation data, with Federal Reserve chair Jerome Powell set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has greatly increased the chance of an interest rate cut in September to about 80%.
“With a recent run in US economic data raising bets for a September rate cut, any validation from upcoming inflation progress may help to support the broader risk environment, which may offer some room for oil prices to stabilise on a more favourable demand outlook,” said IG’s Yeap.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil hardly changed amid easing worry about hurricane damage
Price slip after damage from Hurricane Beryl is less severe than expected
Singapore — Oil prices slipped on Tuesday, extending losses from the previous session, after a hurricane that hit a key US oil-producing hub in Texas caused less damage than markets had expected, easing supply concerns.
Brent futures fell 22c to $85.53 a barrel by 3.21am GMT, while US West Texas Intermediate (WTI) crude fell 24c to $82.09.
“There has been some unwinding in oil prices in today’s session, as market participants look for potential progress in ceasefire negotiations on the Middle East front, while the impact of Hurricane Beryl on supplies disruption has been more limited than what was initially expected,” said IG market strategist Yeap Jun Rong.
Though oil refining activity slowed and some production sites were evacuated, major refineries along the US Gulf Coast appeared to see minimal effect from Hurricane Beryl, which weakened into a tropical storm after hitting the Texas coast.
“Early indications suggest that most energy infrastructure has come through unscathed,” said ING analysts Warren Patterson and Ewa Manthey in a client note, adding that price action in crude oil and refined fuel markets reflect little concern on supply disruption from the hurricane.
That eased market worries about the risk of supply disruption in Texas, where 40% of US crude oil is produced.
Major oil-shipping ports around Corpus Christi, Galveston and Houston had been shut ahead of the storm. The Corpus Christi Ship Channel reopened on Monday and the Port of Houston was projected to resume operations on Tuesday afternoon.
Several key refiners such as Marathon Petroleum were also preparing to restart their refining units.
Market participants are also keeping an eye on the situation in the Middle East for more trading cues. Oil prices settled down 1% on Monday amid the hope a possible ceasefire deal in Gaza could reduce worries about global crude supply disruption.
Senior US officials were in Egypt for talks on Monday, but gaps remained between the two sides, the White House said, and Hamas said a new Israeli push into Gaza threatened the potential agreement.
Markets were also waiting for the release of key US inflation data, with Federal Reserve chair Jerome Powell set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has greatly increased the chance of an interest rate cut in September to about 80%.
“With a recent run in US economic data raising bets for a September rate cut, any validation from upcoming inflation progress may help to support the broader risk environment, which may offer some room for oil prices to stabilise on a more favourable demand outlook,” said IG’s Yeap.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.