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Riyadh: According to Reuters, oil prices were little changed on Tuesday after a hurricane that hit a key US oil-producing hub in Texas caused less damage than markets had expected, easing concerns over supply disruption.
Brent futures rose 4 cents to $85.79 a barrel by 9:22 a.m. Saudi time, US West Texas Intermediate crude climbed 2 cents to $82.35.
Although oil refining activity slowed and some production sites were evacuated, major refineries along the US Gulf Coast appeared to see minimal impact from Hurricane Beryl, which weakened into a tropical storm after hitting the Texas coast.
In a client note, ING analysts Warren Patterson and Ewa Manthey stated, “Early indications suggest that most energy infrastructure has come through unscathed.” They also added that pricing behavior in the crude oil and refined gasoline markets shows little worry about supply disruption from the hurricane.
This reduced investor concerns about the possibility of a supply disruption in Texas, the state that produces 40% of the nation’s crude oil.
Before the hurricane, several significant oil-shipping ports in the Corpus Christi, Galveston, and Houston areas were closed. The Port of Houston was expected to reopen Tuesday afternoon, and the Corpus Christi Ship Channel reopened on Monday.
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Several significant refiners, including Marathon Petroleum, were also getting ready to reopen their facilities.
In search of further trade cues, market participants are closely monitoring the situation in the Middle East. On Monday, oil prices decreased by 1% amid expectations that a potential ceasefire agreement in Gaza would allay concerns about a disruption in the world’s crude supply.
Leading US representatives were in Egypt on Monday for negotiations, but the White House said that differences still existed between the parties, and Hamas claimed that a fresh Israeli offensive into Gaza jeopardized the possible settlement.
While investors bet on a plethora of soft labor market data that has significantly raised the likelihood of an interest rate cut in the US, markets were also anticipating the publication of important US inflation data. Federal Reserve Chair Powell is scheduled to testify before Congress on Tuesday and Wednesday. The likelihood of an interest rate drop in September to roughly 80% has increased significantly as investors bet on a plethora of lackluster labor market data points. Given that recent US economic data has increased expectations for a September rate cut, any confirmation of impending inflation progress could bolster the overall risk environment, which could provide some wiggle room for oil prices to level off given a more optimistic view of demand, according to an email from IG market strategist Yeap Jun Rong.
Strong contractual liftings of Saudi oil by Asian buyers also supported the market, as August exports to China increased for the first time in four months.
