Crude Oil Prices Steady Near Two-Month Highs Amid Demand and Supply Dynamics

Mumbai, 2 Jul (Commoditiescontrol): Crude oil prices remained stable on Tuesday, hovering near the two-month highs reached in the previous session. This steadiness is fueled by expectations of increased fuel demand from the summer travel season and potential U.S. interest rate cuts that could spur economic growth.

Brent crude futures inched up by 20 cents to $86.80 per barrel, following a 1.9% gain in the previous session, marking the highest close since April 30. Similarly, U.S. West Texas Intermediate (WTI) crude rose by 13 cents to $83.51 per barrel after climbing 2.3% to its highest since April 26.

The demand for gasoline in the U.S., the world's largest oil consumer, is anticipated to surge as the summer travel season kicks off with the Independence Day holiday. The American Automobile Association predicts a 5.2% increase in travel during this period compared to 2023, with car travel alone expected to rise by 4.8%.

On the supply side, markets are bracing for potential disruptions from Hurricane Beryl, which could impact U.S. oil refining and offshore production. Current forecasts suggest the storm may move into Mexico's Bay of Campeche, posing risks to oil production there. Beryl, which struck the Caribbean as a category 4 storm on Monday, has prompted "extremely dangerous situation" warnings from the U.S. National Hurricane Center after rapidly intensifying from a category 1 storm within 10 hours.

Additionally, signs of easing inflation in the U.S. are raising hopes for a possible Federal Reserve interest rate cut, potentially in September. A report on Monday indicated that U.S. manufacturing activity contracted for the third month, with input prices falling to a six-month low. Coupled with a Commerce Department report showing unchanged inflation data for May, these factors could bolster the case for lowering interest rates, a move that would enhance economic activity and oil demand.

However, signs of slower-than-expected demand growth have capped gains in oil prices. Data shows that crude imports to Asia, the world's largest oil-consuming region, were lower in the first half of 2024 compared to previous year. This was mainly because of lower imports into China, the world's biggest oil importer and the second-largest consumer.

(By Commoditiescontrol Bureau: 09820130172)