Oil prices edged lower on Monday after a four-week rally, driven by easing concerns over supply disruptions due to potential ceasefire talks in Gaza. However, the potential impact of Hurricane Beryl on US oil production and refining infrastructure remained a concern, limiting the decline in prices.
Brent crude futures were down 42 cents, or 0.5%, at $86.12 a barrel, while US West Texas Intermediate (WTI) crude was at $82.64 a barrel, down 52 cents, or 0.63%.
Talks for a ceasefire between Israel and Hamas are underway, mediated by Qatar and Egypt. If successful, this could reduce geopolitical risk premiums in oil prices. “If anything concrete comes from the ceasefire talks, it will take some of the geopolitical bid out of the market for now,” said IG analyst Tony Sycamore.
Meanwhile, Hurricane Beryl made landfall near Matagorda, Texas on Monday. Ports in the region, including Corpus Christi, Houston, Galveston, Freeport, and Texas City, closed on Sunday in preparation for the storm. Texas is the largest producer of oil and natural gas in the US, raising concerns about potential disruptions to production and refining operations.
“Port closures could bring a temporary halt to crude and liquefied natural gas exports, oil shipments to refineries, and motor fuel deliveries from those plants,” said ING analysts led by Warren Patterson. While offshore oil and gas production may be at risk, the primary concern is the potential impact on refinery infrastructure, which could lead to further price volatility.
Despite the recent dip, strong US demand for oil during peak driving season continues to provide upward pressure on prices. Last week, data from the Energy Information Administration showed stockpiles for crude and refined products fell in the week ended June 28.
“Weekly settlement prices suggest that investors liked what they saw in spite of the pre-weekend profit-taking in oil, which continues this morning on the prospect of the resumption of ceasefire talks between Israel and Hamas and the closure of Texan ports,” said PVM analyst Tamas Varga.
Investors are also watching for any impact from elections in the UK, France, and Iran last week on geopolitics and energy policies, as well as upcoming US inventory data.