Oil prices dipped on Tuesday, surrendering the previous day’s gains as a tropical storm in the Gulf of Mexico raised concerns over supply disruptions. Brent crude slid toward $71.42 per barrel after a 1% surge on Monday, which broke a six-day losing streak.
Meanwhile, West Texas Intermediate (WTI) crude fell to $68.25 per barrel, marking a 0.67% drop for the day.
TROPICAL STORM FRANCINE SPURS SUPPLY CONCERNS
Tropical Storm Francine strengthened in the Gulf of Mexico, prompting drillers to evacuate crews from major oil platforms. Forecasters warned the storm could intensify into a Category 2 hurricane, threatening to strike Louisiana. According to Bloomberg, Francine’s expected path might impact nine major oil platforms, adding further uncertainty to supply forecasts.
BEARISH TRENDS IN OIL PRICES AMID DEMAND CONCERNS
Last Friday, Brent crude closed at its lowest since 2021 due to increasing concerns over restricted demand in key economies and an oversupply in the market. This bearish sentiment has led Wall Street banks to lower their price forecasts for the upcoming quarters.
In a further blow to market confidence, the OPEC+ cartel has delayed its planned output restart, which was originally set for October, exacerbating supply uncertainty.
EXPERT OUTLOOK REMAINS CAUTIOUS
“Oil prices remain stuck in their cautious tone this morning, failing to tap on the relief rally in the risk environment,” said Yeap Jun Rong, a market strategist at IG Asia Pte. He emphasized that while the risks of supply disruption due to Tropical Storm Francine are being closely monitored, overall market conviction for dip-buying has been weak.
At the Asia Pacific Petroleum Conference (APPEC) in Singapore, several speakers, including Ben Luckock, head of oil at Trafigura Group, expressed caution regarding market trends. Luckock predicted that Brent crude prices could soon slip into the $60s.
Traders are also awaiting the release of OPEC’s monthly market outlook later today for further insights into the global oil supply and demand situation.
