Oil prices showed minimal movement on Tuesday, following a previous session’s uptick driven by expectations of heightened fuel demand during the summer season, though investors remained wary ahead of U.S. consumer price data.
Brent futures for August settlement held steady at $85.96 a barrel as of 0640 GMT, a marginal decline of 5 cents after a 0.9% increase on Monday. Similarly, U.S. crude futures edged down 3 cents to $81.60 a barrel, following a 1.1% rise the day before.
Last week, both benchmarks registered a 3% increase, marking the second consecutive week of gains.
The rise in gasoline demand and decreases in oil and fuel inventories in the U.S., the world’s largest oil consumer, have accompanied the peak summer consumption period.
Preliminary data indicated an anticipated 3 million barrel decline in U.S. crude oil stockpiles for the week ending June 21, alongside expected reductions in gasoline stocks and a likely rise in distillate inventories.
Tina Teng, an independent market analyst, attributed the recent surge in oil prices to optimistic demand forecasts and reduced U.S. inventories. She highlighted expectations for continued demand growth in the Northern Hemisphere throughout the summer months, bolstered by upcoming hurricane season dynamics.
However, concerns linger among investors regarding potential further increases in oil prices amid apprehensions that elevated interest rates could dampen fuel consumption and economic expansion.
Additionally, ongoing Ukrainian attacks on Russian oil infrastructure added support to oil prices. Notably, recent drone strikes targeted four refineries, including the Ilsky refinery, a key fuel producer in southern Russia.
Further complicating the market outlook, the European Union’s adoption of sanctions against Russia over its actions in Ukraine included the addition of 27 vessels, operated by Russian state-owned Sovcomflot, to its list of sanctioned entities.
Analysts from ANZ Research underscored market tension ahead of upcoming elections in Iran, suggesting potential geopolitical implications depending on the election outcome, particularly with regards to U.S., Israeli, and Saudi Arabian relations.
In summary, while oil prices remained stable amidst seasonal demand dynamics and geopolitical developments, market sentiment remained cautious pending economic data releases and geopolitical events impacting global supply dynamics.
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