Oil prices were little changed on Monday as traders monitored the potential impact of Tropical Storm Beryl on oil production in the Gulf of Mexico. Attention also remained focused on signs of robust summer demand.
Crude prices have posted four straight weeks of strong gains, driven by expectations of higher summer demand and concerns over weather-related supply disruptions. However, fears of slowing economic growth and softer demand in China, the world’s top oil importer, have somewhat tempered these recent price increases.
Brent crude futures for September delivery edged up 0.2 percent to $86.67 per barrel, while West Texas Intermediate (WTI) crude futures held steady at $82.28 per barrel as of 00:21 GMT. Both benchmarks remained close to their recent two-month highs.
Tropical storm Beryl approaches Texas
Reports indicated that major Texas ports had shut down operations and blocked traffic over the weekend to prepare for Tropical Storm Beryl, which is expected to strengthen into a hurricane before making landfall. The storm is forecast to pass through the state’s key oil exporting regions, raising the potential for delays in crude shipments.
Initial expectations had been for Beryl to have a minimal impact on production, but the storm unexpectedly remained strong after leaving a trail of destruction in Jamaica. The Gulf of Mexico is a crucial oil-producing region for North America and frequently faces output disruptions during the summer storm season. Any disruptions to crude production could lead to tighter supplies, which would be supportive for prices.
Demand and geopolitical risks underpin prices
U.S. travel demand was reportedly at record highs during the recent Independence Day holiday, while a significant drawdown in U.S. inventories also boosted bets on stronger summer demand, providing a floor for oil prices.
Additionally, persistent geopolitical tensions in the Middle East have kept a risk premium priced into oil markets, as an escalation of hostilities could disrupt regional oil production.
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