Brent sheds as supply concerns from Hurricane Beryl ease

The front-month ICE Brent contract moved $0.64/bbl lower on the day, to trade at $85.29/bbl at 09.00 GMT.

PHOTO: An oil pumpjack. Getty Images

Upward pressure:

Brent’s price found some support from the recent geopolitical developments in eastern Europe.

The Russian army launched a missile on Monday, striking a prominent children’s hospital in Kyiv and killing at least 41 civilians, according to a Reuters report. This news has raised concerns about escalation of tension between the two nations, which could lead to oil supply disruptions.

Besides, a wildfire in Alberta continues to threaten heavy crude supplies in Canada and put some upward pressure on oil prices, according to a Bloomberg report. “Suncor Energy said it had to curtail production at its Firebag oil sands site due to the out-of-control fire,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

A “significant reduction” in US crude oil inventories has supported Brent’s price this week. The recent drop in crude stocks is seen as an indication of robust demand growth during the summer travel season in the US, analysts from Saxo Bank said.

Downward pressure:

Brent’s price inched lower after Hurricane Beryl caused less damage to oil production facilities in Texas than the oil market participants had anticipated. This has alleviated supply disruption concerns in the oil market.

“Hurricane Beryl, a Category 1 storm made landfall on the Texas coast on Monday significantly weaker than it was last week,” Hynes said.

The shipping channel in Corpus Christi, which was closed due to the approaching storm, reopened yesterday and the Port of Houston is expected to resume operations later today, Reuters reported.

Major US refiners including Marathon Petroleum are expected to restart refining units as the severe effects of the hurricane appear to have passed, according to market analysts.

“Initial assessment of the aftermath of Hurricane Berryl in Texas showed no major damage to downstream infrastructure or the offshore oil and gas production in the Gulf of Mexico, allaying concerns of supply disruptions,” VANDA Insights’ founder and analyst Vandana Hari remarked.

Oil market analysts are also looking out for new developments in the Middle East, amid growing hopes of a ceasefire deal between Israel and Hamas, which could ultimately ease supply concerns in the world’s biggest oil-producing hub.

By Aparupa Mazumder

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