Oil prices declined on Tuesday, pulling back after ongoing worries about escalating conflict in the Middle East had driven substantial gains over the past week.
The oil markets experienced a wave of profit-taking after reaching their highest levels in over a month. Concerns about prolonged supply interruptions in the U.S. provided support for oil prices, particularly as the nation prepared for its second significant hurricane—Milton—in just a month.
Brent crude futures for December delivery dropped 0.6 percent to $80.42 a barrel, while West Texas Intermediate (WTI) crude futures fell 0.6 percent to $76.04 a barrel by 21:05 ET (01:05 GMT). Both contracts had recently reached their highest points in over a month.
Read more: Oil prices dip on oversupply concerns amid rising Middle East tensions
Dollar strength impacts crude prices
However, any further increases in crude prices were hindered by a strengthening dollar, as expectations of smaller interest rate cuts in the U.S. bolstered the currency. This week, attention is also on U.S. inflation data.
Chinese market reopening watched closely
Traders are keeping an eye on the reopening of Chinese markets following a week-long holiday, especially since the world’s largest oil importer has announced a series of significant stimulus measures.
Ongoing concerns in the Middle East
The threat of escalation in the Middle East continues to be a primary support factor for oil markets. Optimistic traders are betting that a deteriorating conflict could disrupt oil supplies from the region.
Impact of Hurricane Milton
Additionally, the oil markets are monitoring Hurricane Milton’s potential effects on U.S. oil production, as the storm is expected to traverse the Gulf of Mexico before making landfall on Florida’s west coast this week. While the hurricane is anticipated to bypass most oil infrastructure in the Gulf, several ports in the area may impose restrictions, which could lead to disruptions in oil shipments.
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