(London) Oil prices were supported on Tuesday by the prospect of US rate cuts, the continuation of the conflict in the Middle East and the risk of supply disruptions linked to hurricanes.
At around 5:30 a.m. (Eastern time) (11:30 a.m. in Paris), the price of a barrel of North Sea Brent crude for delivery in September was up 0.68% at $87.19, after reaching $87.25, its highest level since the end of April.
Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery in August, rose by 0.72% to 83.98 dollars, having earlier also reached its record for two months, at 84.05 dollars.
“The increasingly likely Fed interest rate cuts in the coming months and the still high geopolitical risk premium,” particularly due to the war between Israel and Hamas, are helping to push up prices, says Claudio Galimberti of Rystad Energy.
Inflation is gradually easing in the United States, which leads markets to expect “rate cuts of at least two-quarters of a percentage point this year, potentially starting in September,” the analyst notes.
But lower interest rates weigh on the greenback, the currency in which oil purchases are denominated, which encourages its purchase.
A speech by the chairman of the Federal Reserve (Fed) on Tuesday, followed by the publication of the minutes of the monetary institution’s last June meeting on Wednesday, should provide investors with more clarity on this subject.
“The drop in OPEC crude exports” in June compared to the previous month, “at the very moment when refineries are ramping up in anticipation of the summer peak, is helping to make the market tighter than expected, and prices are reacting accordingly,” Galimberti added.
Moreover, “market participants are hedging against the possibility of refinery disruptions as hurricane season begins and Beryl” gains intensity, said Tamas Varga of PVM Energy.
Hurricane Beryl, which is sweeping several islands in the south-east of the Antilles with devastating rains and extreme winds, was in fact reclassified overnight as a category 5, the highest on the meteorological scale, by the American National Hurricane Center (NHC).
A weather event of this scale is extremely rare so early in the hurricane season, which runs from early June to late November in the United States.
Mr. Varga finally noted the good health of the manufacturing sector in China, the world’s largest oil importer, according to data published the day before.