Oil futures moved higher on Tuesday as traders bet that U.S. government data due Wednesday will show a decline in weekly domestic crude stockpiles on the back of storm-related disruptions to output.
Prices had posted losses Monday as production in the Gulf of Mexico began its recovery from what was known as Hurricane Barry over the weekend.
August West Texas Intermediate crude CLQ19, +0.32% was up 14 cents, or 0.2%, at $59.72 a barrel after falling 1.1% on Monday. International benchmark September Brent BRNU19, +0.65% added 37 cents, or 0.6%, to trade at $66.85 a barrel.
Crude oil ended higher last week, its third positive weekly close out of the past four weeks, “thanks to ongoing Middle East tensions, falling U.S. crude inventories and storm Barry in the Gulf of Mexico—all raising short-term supply shock risks,” said Fawad Razaqzada, technical analyst at Forex.com, in a note Tuesday.
“But Hurricane Barry was not as destructive as feared after making landfall on the Louisiana coast on Saturday with winds barely meeting hurricane criteria,” he said. “For that reason, crude oil speculators evidently took profit on Monday, which saw prices fall noticeably.”
“Monday’s selling did indeed look like it was driven by profit-taking and technical selling given the small ranges oil prices had traded around in the closing days of last week,” said Razaqzada. “A burst of bullish momentum earlier in [last] week had probably seen speculators tighten their stop loss orders to protect their profits from evaporating in what is a headline-driven market.”
U.S. oil inventories data are due out from the Energy Information Administration on Wednesday. Trade group the American Petroleum Institute will issue its own figures late Tuesday. Analysts expect the government report to reveal a fall of 4.2 million barrels in crude supplies, on average, for the week ended July 12, according to a survey conducted by S&P Global Platts. Gasoline stockpiles are expected to fall by 1.5 million barrels, while distillate supplies are seen higher by 300,000 barrels, the survey showed.
“If we see more unexpectedly sharp de-stocking in crude inventories, then this could keep prices supported for a while yet. However, if a bigger build is reported then this will likely give speculators an excuse to sell oil aggressively after the recent rally,” said Razaqzada.
In other energy trade, August gasoline RBQ19, +0.66% fell 1.2 cents, or 0.6%, to $1.9414, while August heating oil HOQ19, +0.82% added 1.6 cents, or 0.8%, to $1.9677 a gallon.
August natural gas NGQ19, -3.32% fell 8.2 cents, or 3.4%, to $2.326 per million British thermal units, with analysts attributing forecasts for below normal temperatures, as well as recent power outages tied to the Gulf storm, for the price decline.
Add Comment