Brent futures for August settlement were 20 cents lower at $85.81 a barrel after adding 0.9 per cent on Monday
Oil prices were steady on Tuesday, easing only marginally from the previous session’s gains on escalating geopolitical tensions and expectations of improved fuel demand this summer, while investors awaited U.S. inflation data later this week.
Brent futures for August settlement were 20 cents lower at $85.81 a barrel by 0925 GMT after adding 0.9 per cent on Monday. U.S. crude futures slid 18 cents to $81.45 after increasing 1.1 per cent the previous day.
Both benchmarks added nearly 3 per cent last week, marking two consecutive weeks of gains.
Front-month Brent prices could push into the upper $80s in the short term, driven by the confluence of growing geopolitical risk and bullish fundamentals, steepening the market’s backwardation, according to Rystad Energy analyst Claudio Galimberti.
Backwardation is when front-month prices are higher than the second month, making oil likelier to be used now rather than be left in storage for the future.
Oil and fuel stockpiles have dropped and gasoline demand is increasing as the US, the world’s biggest oil consumer, enters its peak summer consumption period.
U.S. crude oil stockpiles are expected to have dropped by 3 million barrels in the week to June 21, a preliminary Reuters poll showed on Monday. Gasoline stocks were also expected to have dropped while distillate inventories are likely to have increased.
The surge in oil prices was triggered by an optimistic demand outlook and reduced U.S. inventories. With the Northern Hemisphere entering a hot summer and the upcoming hurricane season, demand is expected to continue increasing in the coming months, according to independent market analyst Tina Teng.
