Oil futures climbed on Tuesday, with U.S. prices settling at their highest in more than a week, buoyed by risks to energy market operations posed by Hurricane Idalia as it heads towards Florida.
Ongoing concerns about energy demand, however, helped to limit gains for oil prices.
Price history
-
West Texas Intermediate crude for October delivery
CL00,
+0.83% CL.1,
+0.83% CLV23,
+0.83%
climbed $1.06, or 1.3%, to settle at $81.16 a barrel on the New York Mercantile Exchange, the lowest front-month finish since Aug. 18, according to Dow Jones Market Data. -
October Brent crude
BRNV23,
+0.75% ,
the global benchmark, added $1.07, or 1.3%, at $85.49 a barrel on ICE Futures Europe, the highest in about two weeks. November Brent
BRN00,
+0.75% BRNX23,
+0.75% ,
the most actively traded contract, rose $1.04, or 1.2%, to $84.91 a barrel. -
September gasoline
RBU23,
+1.14%
lost 0.2% to $2.79 a gallon and September heating oil
HOU23,
+0.18%
settled at $3.21 a gallon, up 0.2%. -
September natural gas
NGU23
lost 0.9% at $2.56 per million British thermal units on the contract’s expiration day.
Market drivers
The National Hurricane Center warned late Tuesday morning that Hurricane Idalia was strengthening, and had the potential for “destructive life-threatening winds where the core of Idalia moves onshore in the Big Bend region of Florida.”
“Little impact to crude production is expected this far east in the Gulf, but local disruptions to demand are expected for refined products markets,” StoneX’s Kansas City energy team, led by Alex Hodes, wrote in Tuesday’s newsletter.
Read: Idalia heads for Florida; Citgo fuel contamination problem strikes first
Crude has rallied this summer in response to supply cuts from the Organization of the Petroleum Exporting Countries and its Russia-led allies — a group known as OPEC+. An additional, voluntary cut of 1 million barrels a day by Saudi Arabia that began in July and is set to run at least through September has been cited as a particular pillar of support.
But worries over the global economic outlook have served to limit upside. China’s economic data has routinely disappointed this year, while the country’s troubled property sector has amplified concerns about demand from the world’s second-largest crude consumer.
“The economic news seems dominated by China’s troubles, which is bearish, along with the glacial progress in removing sanctions on Iran and Venezuela,” Michael Lynch, president of Strategic Energy & Economic Research, told MarketWatch. “Also, the summer driving season is nearing an end.”
Overall, Lynch expects a drift downward this week for oil, “maybe several dollars lower, but expectations of tightening in the next few months (based on the IEA forecast) will prevent any serious slide” in prices, he said.
The Energy Information Administration will release its weekly U.S. petroleum supply report Wednesday morning.
On average for the week ended Aug. 25, analysts expect the report to show supply declines of 5.2 million barrels for crude, 600,000 barrels for gasoline, and 1.4 million barrels for distillates, according to a survey conducted by S&P Global Commodity Insights.
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