Oil Down A Third Straight Day As Texas Shrugs Off Beryl

by Ship & Bunker News Team
Tuesday July 9, 2024

Oil continued its modest slide on Tuesday as more evidence surfaced that despite its hype, Hurricane Beryl would not cause prolonged supply disruptions.

As of 1517 GMT, Brent fell 31 cents to $85.44 per barrel, and West Texas Intermediate dipped 23 cents to $82.10 per barrel.

Warren Patterson and Ewa Manthey, analysts at ING, were the latest pundits to assuage clients: they wrote in a note, "Early indications suggest that most energy infrastructure has come through unscathed."

Jim Ritterbusch, president of Ritterbusch and Associates, added (as major Texas oil ports began reopening on Tuesday), "The sum total of these various developments appears to be negligible and temporary, as underscored by this week's selling across the complex."

Vandana Hari, founder of oil market analysis provider Vanda Insights, offered a slightly different perspective of Tuesday's oil trading activity by remarking, "Crude futures were inching lower early Tuesday after a second consecutive session of losses suggested an overdue pullback from (a) nine-week high."

However, as usual at this time of year fear mongering about hurricanes persisted, with Colorado State University forecasting an "extremely active Atlantic hurricane season" with 11 hurricanes expected, above the 1991 to 2020 average of 7.2 storms.

The trading was also influenced by ongoing and perhaps misguided sentiment on two fronts: hope that the latest round of ceasefire talks between Israel and Hamas would bear fruit (on Tuesday Hamas complained that a new Israeli push into Gaza threatened the talks), and hope that the U.S. Federal Reserve would respond to soft labour market data by lowering interest rates – which the Fed has infamously been reluctant to do.

Indeed, Bloomberg reported that "Earlier, prices traded above $82 a barrel after [Fed chair Jerome] Powell said the labor market has 'cooled considerably,' but further comments that avoided sending signals about imminent rate cuts caused markets to give up previous gains."

Overall, expectations for robust fuel consumptions have supported oil, although declining supertanker earnings reflect challenges with consumption in China.

Next up for crude trading is Wednesday's release of U.S. inventory data; the hopes are that oil and gasoline stocks will fall, signalling increased demand in the wake of a slow summer consumption start.

But Macquarie is forecasting that inventories dropped by 1.2 million barrels last week, with the total balance "only modestly tighter than we had anticipated."