Brent trails lower following Powell’s remarks

The front-month ICE Brent contract lost $0.38/bbl on the day, to trade at $84.91/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Brent crude price found some upward momentum from escalating geopolitical risks in eastern Europe.

Attack drones deployed by Kyiv yesterday caused a fire in an oil depot and a power substation situated in Russia’s Volgograd region. The attack has rekindled supply concerns in the global oil market.

Andrei Bocharov, the regional governor of Volgograd, stated on Telegram that although the fire in the substation was quickly put out, the oil depot remained ablaze.

The US crude oil inventories declined by 1.9 million bbls in the week that ended 5 July, according to the American Petroleum Institute (API) estimates. This draw was “moderately bullish,” according to VANDA Insights’ founder and analyst Vandana Hari.

A decline in US crude stocks is considered a positive indicator of oil demand growth and could push oil prices higher. The broadly followed US government data on crude oil stockpiles from the US Energy Information Administration (EIA) is due later today.

Downward pressure:

Brent trailed lower as supply concerns due to Hurricane Beryl eased. The tropical storm had a minimal effect on Texas's refining infrastructure and the Gulf Coast's oil production.

“The oil hub of Houston made it through the worst of Hurricane Beryl, reporting progress on recovery efforts,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked.

Talks of a ceasefire in the Gaza Strip will resume in Doha today, Reuters reports. Top negotiators from Egypt, the US, and Israel will be present, the report stated. Oil market analysts assert that if the ceasefire agreement is successful, oil supply concerns in the Middle East will ease.

Jerome Powell, the chairman of the US Federal Reserve (Fed), informed the US Senate Banking Committee on Tuesday that while the Fed was willing to lower interest rates this year, more work was needed to get inflation below the Fed's targeted 2% level.

“Powell noted a cooling labour market, but his later comments did not suggest imminent rate cuts, contributing to the decline in oil prices,” analysts from Saxo Bank said.

By Aparupa Mazumder

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