© Reuters. FILE PHOTO: A worker pumps petrol for a customer at a petrol station in Barcelona, Spain on February 4, 2022. REUTERS/Nacho Duce
By Shadia Nasralla
Oil prices fell on Tuesday ahead of data that sheds light on the US’s appetite for fuel during the summer driving season, as the price structure of benchmark Brent Crude indicated a retreat for the bulls.
By 1349 GMT, futures were down 74 cents, or 1%, at $73.44 a barrel. West Texas Intermediate (WTI) futures fell 74 cents, or 1.1%, to $68.63. Both benchmarks had earlier fallen by more than $1.
Both contracts are trading broadly in the middle of the $10 range tracked since early May. Primarily, rates have been at the mercy of “the ever-changing expectations of interest rates,” said Oanda analyst Craig Erlam.
European Central Bank President Christine Lagarde said on Tuesday that stubbornly high inflation will require the bank to avoid announcing an end to interest rate hikes. Higher interest rates can affect economic activity and demand for oil.
European stocks also fell. (MKTS/GLOB)
US inventory data from the American Petroleum Institute is expected after 2000 GMT, followed by government data on Wednesday.
Six-month Brent Crude – a price structure in which short-load contracts trade above late-load contracts – has fallen to its lowest levels since December and is barely positive, indicating diminishing concern about supply crunches.
For the two-month spread, the market is in a shallow shadow, the opposite price structure, which indicates that traders are dealing with a slightly oversupplied market.
Meanwhile, the market shrugged off the aborted Wagner mercenary group’s rebellion in Russia over the weekend, as Russian oil shipments remained on schedule.
“The latest geopolitical outbreak quickly pales into insignificance compared to ongoing macroeconomic considerations,” said Tamas Varga of PVM.
This is the case despite Saudi Arabia’s pledge to cut production from July.
Much depends on whether Chinese demand for oil picks up in the second half, Premier Li Qiang said China will take steps to invigorate markets with details provided.