Oil prices were little changed on Tuesday, remaining near two-month highs in the previous session on expectations of higher fuel demand from the summer travel season and possible U.S. rate cuts that could boost economic growth.
Brent crude futures rose 28 cents to $86.88 a barrel by 0634 GMT after rising 1.9% in the previous session to reach the highest close since April 30.
WTI crude rose 2.3%, or 20 cents, to $83.58 a barrel, reaching its highest since April 26.
Oil price action appears to be driven by concerns and uncertainties rather than fundamentals. Supporting factors include the outlook for higher summer fuel demand, the conflict between Israel and Iran, and the potential impact on supply from Hurricane Beryl.
Demand for gasoline in the United States, the world’s largest oil consumer, will rise this week as the summer travel season begins with the Independence Day holiday. The American Automobile Association predicts that holiday travel will be 5.2% higher than in 2023, while solo car travel will be 4.8% higher than a year ago.
Markets are bracing for possible disruptions to U.S. oil refinings and offshore production from Hurricane Beryl. However, forecasts now show the storm is likely moving toward Mexico’s Bay of Campeche, causing problems for oil production there.
Beryl hit the Caribbean on Monday as a Category 4 storm, after a warning of a hazardous situation from a Category 1 storm within 10 hours.
Signs of easing inflation in the U.S. are renewing hopes that the Federal Reserve will likely cut interest rates in September.
A report on Monday showed that U.S. manufacturing activity contracted for a third month, with prices manufacturers paid for some inputs falling to a six-month low.
A Commerce Department report on Friday showed that U.S. inflation data remained unchanged in May, bolstering the case for lower U.S. interest rates, a move that would boost economic activity and oil demand.
But signs of weaker-than-expected demand growth are limiting gains in oil prices.
Some data suggest that crude oil imports to Asia, the world’s largest oil-consuming region, will be lower in the first half of 2024 compared to last year, particularly due to lower imports to China, the world’s second-largest consumer.
