July 23 2024: Oil prices stabilized on Tuesday after declining for the past two sessions, as investors remained cautious amidst expectations of abundant supplies and weak demand. The market largely ignored the recent upheaval in the U.S. presidential campaign.
Current Prices:
Brent crude futures for September: Rose 11 cents to $82.51 a barrel by 0645 GMT.
U.S. West Texas Intermediate crude for September: Climbed 5 cents to $78.45 per barrel.
Political Impact:
Traders showed little reaction to President Joe Biden’s decision to withdraw from the 2024 presidential race and endorse Vice President Kamala Harris. Citi analysts suggested that neither Harris nor Republican nominee Donald Trump is expected to implement policies that would significantly impact oil and gas operations.
Market Fundamentals:
The market’s focus remains on supply and demand fundamentals. Morgan Stanley analysts predict the market will balance out by the fourth quarter and enter a supply surplus next year, potentially bringing Brent prices down to the mid-to-high $70s per barrel range.
Priyanka Sachdeva, senior market analyst at Phillip Nova, attributed any uptick in oil prices to market consolidation and dip-buying activities. She noted that further weakening demand signals, combined with a resolution in Gaza, could lead to a further decrease in oil prices.
U.S. Inventory Data:
The American Petroleum Institute (API) is expected to release estimates for last week’s oil inventories on Tuesday, with official U.S. government data scheduled for Wednesday. A preliminary Reuters poll of six analysts estimated that U.S. crude stocks likely fell by 2.5 million barrels in the week to July 19, while gasoline stocks probably dropped by 500,000 barrels.
Geopolitical Developments:
The market is also closely watching developments in Russia. The Tuapse oil refinery, Russia’s largest on the Black Sea, was damaged in a major Ukrainian drone attack, causing a fire. While the extent of the damage is not immediately clear, ING market strategists noted that further strikes on Russian refinery capacity would support refined product prices due to lower output, while increasing crude oil availability for export could be bearish for crude oil prices.