Oil market slips amid ceasefire hopes and storm concerns
Oil prices slid on Monday after rising for four weeks, as the prospect of a ceasefire deal in Gaza eased geopolitical tensions in the Middle East, while investors assessed potential disruption to US energy supplies from Tropical Storm Beryl.
Brent crude futures were down 36 cents, or 0.4 per cent, at $86.18 a barrel, as at 0646 GMT.
US West Texas Intermediate crude was at $82.71 a barrel, down 45 cents, or 0.5 per cent.
Talks over a US ceasefire plan aimed at ending the nine-month-old war in Gaza are under way, and being mediated by Qatar and Egypt.
“If anything concrete comes from the ceasefire talks, it will take some of geopolitical bid out of the market for now,” said IG analyst Tony Sycamore based in Sydney.
The ports of Corpus Christi, Houston, Galveston, Freeport and Texas City closed on Sunday to prepare for Hurricane Beryl, which is expected to make a landfall in the middle of the Texas coast between Galveston and Corpus Christi later on Monday.
Port closures could bring a temporary halt to crude and liquefied natural gas exports, oil shipments to refineries, and motor fuel deliveries from those plants.
“While this puts some offshore oil and gas production at risk, the concern when the storm makes landfall is the potential impact it could have on refinery infrastructure,” ING analysts led by Warren Patterson said in a note.
“Any meaningful disruptions to Texas refinery operations will likely support refined product cracks.”
IG’s Sycamore said there is also a good chance of US data showing another large weekly draw in US oil inventories amid peak driving season, which will be supportive for oil prices.
WTI gained 2.1 per cent last week after data from the Energy Information Administration showed stockpiles for crude and refined products fell in the week ended June 28.
“WTI has had a very good run, though, having rallied 15 per cent from the early June low,” Sycamore said, adding that the benchmark could see strong resistance between $85.50 and $87.50 based on technical charts.
The number of operating oil rigs in the US were unchanged at 479 last week, holding at its lowest since December 2021, Baker Hughes (BKR.O) said in its weekly report on Friday.
Oil prices were also supported last week by hopes of interest rate cuts following US data on Friday that showed inflation is easing and job growth slowing.
Lower interest rates can boost economic activity and increase crude oil demand.
Investors were also watching for any impact from elections in the UK, France and Iran last week on geopolitics and energy policies.
France faced potential political deadlock after elections on Sunday threw up a hung parliament while Iranians chose Masoud Pezeshkian as their new president, a relative moderate who beat a hard-line rival in the election.