Oil futures ended modestly higher Tuesday, bouncing back from sharp losses the previous session as traders looked ahead to a meeting of the Organization of the Petroleum Exporting Countries and its allies.
Price action
- West Texas Intermediate Crude CL00, +0.34% CL.1, +0.34% CLU22, +0.34% for September delivery rose 53 cents, or 0.6%, to end at $94.42 a barrel on the New York Mercantile Exchange.
- October Brent crude, BRN00, -0.43% BRNV22, -0.43% the global benchmark, rose 51 cents, or 0.5%, settling at $100.54 a barrel on ICE Futures Europe.
- Back on Nymex RBU22, +1.41%, September gasoline rose 2% to $3.057 a gallon, while September heating oil HOU22, -1.78% declined 1.7% to $3.38 a gallon.
- September natural gas NGU22, -7.55% dropped 7% to $7.706 per million British thermal units
What analysts are saying
Oil futures fell sharply on Monday, a decline that could make OPEC+ more cautious about boosting production when it meets Wednesday “because it was attributable to renewed demand concerns in the wake of disappointing economic data from China, the world’s second-largest oil consumer country,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
See: China manufacturing sector contracts in July, home sales fall sharply
He also noted that Monday’s fall was due in part to the Brent contract rollover since the October contract was trading at a discount to the September contract at the time that it became the most active contract.
Furthermore, the fact that oil production in Libya has now returned to normal levels for the first time in four months could also help dissuade OPEC+ from trying to increase production, he said.
Reuters, citing OPEC+ officials, reported last week that the group would consider holding output steady, though a small increase might also be weighed.
Natural-gas futures extended a decline, with some of the downturn “likely driven by forecasts for the second half of August, which show temperatures turning milder for the East, Midwest, and part of the Southwest US. This may reduce power sector gas demand and loosen market balances,” said Christin Kelley, senior commodity analyst at Schneider Electric, in a note.
“Near-term though, weather forecasts remain bullish with NOAA’s 6 to 10-day forecast showing hotter-than-normal conditions across the entire U.S. except part of the Southwest,” Kelley wrote.
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