By Adedapo Adesanya
Oil fell on Tuesday following traders’ discovery that extended supply interruptions were unlikely since Hurricane Beryl’s damage to the US oil-producing powerhouse in Texas was less than anticipated.
Brent crude futures settled at $84.66 a barrel after it lost $1.09 or 1.3 per cent, and the US West Texas Intermediate (WTI) crude traded at $81.41 per barrel after it shed 92 cents or 1.1 per cent.
Although some offshore US production sites were evacuated, ports closed and refining slowed, major refineries along the country’s Gulf Coast appeared to sustain minimal impact after Beryl weakened into a tropical storm.
Major Texas oil shipping ports were reopened on Tuesday, and some facilities were ramping up output again. Texas accounts for more than 40 per cent of crude supplied in the US, the world’s top oil producer.
Comments by Federal Reserve Chair Jerome Powell, who told a Congressional committee on Tuesday that the employment market had cooled and the economy was no longer hot, also generated conflicting responses from oil investors.
Although there was an indication of a probable slowing down of interest rate reductions, oil prices dropped further after the comments as a poor economy would affect crude demand.
Market participants are also watching the situation in the Middle East. On Monday, oil prices settled down 1 per cent on hopes a possible ceasefire deal in Gaza between Israel and Hamas could reduce worries about global crude supply disruption.
While senior US officials were in Egypt for negotiations on Monday, the White House reported that there were divisions between the two sides and Hamas claimed a fresh Israeli attack into Gaza jeopardised a possible accord.
Crude oil inventories in the United States fell this week by 1.9 million barrels for the week ending July 5, according to The American Petroleum Institute (API), after analysts had expected a 250,000-barrel draw.
For the week prior, the API reported a surprise 9.163-million-barrel draw in crude inventories.
Official data from the Energy Information Administration (EIA) will be released later on Wednesday.
On Tuesday, the EIA raised its 2024 demand estimate to 1.11 million barrels per day—up from 1.08 million barrels per day—while also raising the 2025 estimate from 1.53 million barrels per day to 1.77 million barrels per day, noting that the global oil market is heading for a supply deficit next year.