Oil prices held steady near a six-week low on Tuesday, as traders awaited fresh clues on
market balances, including the outlook for US stockpiles. Brent crude remained above $82
a barrel, while West Texas Intermediate was near $78.
The recent drop in oil prices was driven by concerns over Chinese demand and sales by
algorithmic traders, exacerbating the downward pressure. However, crude remains higher
year-to-date, supported by OPEC+ supply cutbacks and expectations of lower US interest
rates from September.
The lingering Chinese demand concerns following recent poor data continue to weigh on
oil said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore.
“OPEC+ cuts should ensure that the market tightens in the current quarter. However, how
tight it will get will depend on how Chinese demand evolves.
The industry-funded American Petroleum Institute (API) will release its estimate for weekly
shifts in US inventories later on Tuesday, followed by a government breakdown the next day.
Nationwide crude stockpiles have dropped for the past three weeks, hitting the lowest
since February.
Political risks remain a key factor, with investors considering the implications of Joe Biden
dropping his presidential reelection bid. The move has sparked uncertainty in the market,
as traders weigh the potential impact on global economic growth and oil demand.
Despite the current volatility, oil prices remain supported by the ongoing supply cutbacks
by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, as well as
expectations of lower US interest rates later this year.
As the market awaits fresh clues on the outlook for oil demand and supply, prices are likely
to remain volatile in the coming days.
