Oil prices slipped on Tuesday, extending losses from the previous session, after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than markets had expected, easing supply concerns.
Brent futures fell 22 cents to $85.53 a barrel by 0321 GMT, while U.S. West Texas Intermediate (WTI) crude fell 24 cents to $82.09.
“There has been some unwinding in oil prices in today’s session, as market participants look for potential progress in ceasefire negotiations on the Middle East front, while the impact of Hurricane Beryl on supplies disruption has been more limited than what was initially expected,” said IG market strategist Yeap Jun Rong.
Although oil refining activity slowed and some production sites were evacuated, major refineries along the U.S. Gulf Coast appeared to see minimal impact from Hurricane Beryl, which weakened into a tropical storm after hitting the Texas coast.
Oil prices fall on worries
“Early indications suggest that most energy infrastructure has come through unscathed,” said ING analysts Warren Patterson and Ewa Manthey in a client note, adding that price action in crude oil and refined fuel markets reflect little concern on supply disruption from the hurricane.
That eased market worries about the risk of supply disruption in Texas, where 40% of U.S. crude oil is produced.
Major oil-shipping ports around Corpus Christi, Galveston and Houston had been shut ahead of the storm. The Corpus Christi Ship Channel reopened on Monday and the Port of Houston was projected to resume operations on Tuesday afternoon.
Several key refiners such as Marathon Petroleum were also preparing to restart their refining units.
Market participants are also keeping an eye on the situation in the Middle East for more trading cues. Oil prices settled down 1% on Monday amid hopes a possible ceasefire deal in Gaza could reduce worries about global crude supply disruption.
Senior U.S. officials were in Egypt for talks on Monday, but gaps remained between the two sides, the White House said, and Hamas said a new Israeli push into Gaza threatened the potential agreement.
Markets were also waiting for the release of key U.S. inflation data, with Federal Reserve Chair Powell set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has greatly increased the chance of an interest rate cut in September to about 80%.
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