Oil cautious on expectations of ample supply, weak demand

Oil prices settled on Tuesday after falling in the past two sessions as investors remained cautious amid expectations of ample supply and weak demand, ignoring the turmoil in the U.S. presidential election.

Brent crude futures for September rose 11 cents to $82.51 a barrel by 0645 GMT. WTI crude oil rose 5 cents to $78.45 a barrel for September.

Traders largely ignored U.S. President Joe Biden’s decision on Sunday to endorse Vice President Kamala Harris.

Some analysts said they did not believe either Harris or Republican nominee Donald Trump would promote policies that would significantly impact oil and gas operations.

Others focused on fundamentals that they said were likely to stabilize the market in the fourth quarter and reach a surplus next year; This would push Brent prices into the mid- to upper-$70s per barrel range.

A rise in oil prices is likely due to market consolidation and low buying activity.

A weakening demand signal from a Gaza settlement could lead to further declines in oil prices, and last week’s increase in U.S. inventories could be a sign of weaker demand.

The American Petroleum Institute (API) is due to release its estimates for last week’s oil inventories on Tuesday, and official U.S. government data is due on Wednesday.

Six analysts estimate U.S. crude inventories fell by an average of 2.5 million barrels in the week to July 19, while gasoline inventories are likely to have fallen by 500,000 barrels.

The market is also watching developments in Russia. Russian officials said on Monday that the Tuapse oil refinery, the largest on the Black Sea, was damaged in a major Ukrainian drone strike and caught fire, but the extent of the damage was not yet clear.

Further attacks on Russian refining capacity would support refined product prices due to lower production and be slightly bearish for crude oil because it would increase crude availability for exports.

Scroll to Top