Oil prices remained stable on Tuesday, trading near two-month highs as demand is expected to increase during the summer driving season and potential disruptions from Hurricane Beryl. Brent crude futures rose 51 cents to $87.11 a barrel, while US West Texas Intermediate (WTI) crude was up 51 cents at $83.89, with both benchmarks gaining about 2% in the previous session. US gasoline demand is set to rise with the summer travel season, and the American Automobile Association predicts a 5.2% increase in travel during the Independence Day holiday period, with car travel up 4.8%.
Additionally, oil prices are being supported by a rising risk premium due to tensions in the Middle East and indications of decreasing inflation in the United States, which has revived hopes of interest rate cuts. Markets are also monitoring potential disruptions to US refining and offshore production following Hurricane Beryl’s impact on the Caribbean as a category 4 storm. The storm is expected to hit Mexico, raising concerns about supply shortages. Recent US data suggests that the Federal Reserve may implement two quarter-point interest rate cuts this year.
Increased geopolitical risk is also contributing to the market’s upward potential, according to independent energy analyst Tim Evans, although lower-than-expected demand growth has restricted oil price increases. Some data suggests that first-half crude imports to Asia, the world’s largest oil-consuming region, were lower compared to the same period last year. This trend, coupled with other market factors, may limit oil price gains despite the positive outlook for demand during the summer season.
Overall, oil prices are expected to remain steady near recent highs, buoyed by increased summer demand and potential supply disruptions from Hurricane Beryl. Geopolitical tensions and signs of easing inflation in the US are also supporting prices, with expectations of interest rate cuts further boosting market sentiment. Despite some concerns about lower-than-expected demand growth in certain regions, the overall outlook for oil prices remains optimistic as the summer driving season gets underway. Investors will continue to monitor developments in the global oil market and geopolitical landscape for potential impacts on prices in the coming weeks.
