Oil prices remained stable on Tuesday following a hurricane that hit Texas, a major U.S. oil-producing region, with less damage than expected. Brent futures increased by 4 cents to $85.79 a barrel, and U.S. West Texas Intermediate (WTI) crude also rose by 2 cents to $82.35. Despite the storm slowing down oil refining activity and causing evacuations at some production sites, major refineries along the U.S. Gulf Coast seemed to be minimally impacted by Hurricane Beryl, which weakened into a tropical storm after making landfall in Texas. ING analysts indicated that most energy infrastructure was unscathed, leading to limited concern about supply disruption in the crude oil and refined fuel markets.
The concerns over potential supply disruption from the hurricane in Texas, where 40% of U.S. crude oil is produced, were alleviated, as major oil-shipping ports around Corpus Christi, Galveston, and Houston reopened for operations. Market participants were monitoring the situation in the Middle East for further trading cues, as oil prices dropped by 1% on Monday amid hopes for a ceasefire deal in Gaza that could ease worries about global crude supply disruption. Senior U.S. officials were conducting talks in Egypt on Monday, yet gaps remained between the parties involved, and renewed Israeli incursions into Gaza threatened the potential agreement.
Additionally, investors were awaiting the release of key U.S. inflation data and Federal Reserve Chair Powell’s appearances before Congress. The possibility of a September rate cut has increased to about 80% following soft labor market data. With the recent run in U.S. economic data, a September rate cut could be likely, which could impact the broader risk environment and offer support for oil prices. IG market strategist Yeap Jun Rong mentioned that validation from upcoming inflation progress may help stabilize oil prices due to a more favorable demand outlook. Moreover, robust liftings of Saudi crude from Asian buyers on a contractual basis further supported the market, as August exports to China were expected to increase for the first time in four months.
