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Oil prices fall more than 1% after US crude hub escapes serious damage from Beryl

Published 07/08/2024, 09:25 PM
Updated 07/09/2024, 03:20 PM
© Reuters. FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo
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By Laila Kearney

NEW YORK (Reuters) -Oil prices eased more than 1% on Tuesday after traders learned that prolonged supply disruptions from Hurricane Beryl were unlikely after a U.S. oil-producing hub in Texas suffered less storm damage than feared.

Brent crude futures settled at $84.66 a barrel, falling $1.09 a barrel, or 1.3%. U.S. crude settled at $81.41 at, losing 92 cents, or 1.1%.

Although some offshore U.S. production sites were evacuated, ports closed and refining slowed, major refineries along the country's Gulf Coast appeared to sustain minimal impact after Beryl weakened into a tropical storm.

"Early indications suggest that most energy infrastructure has come through unscathed," ING analysts Warren Patterson and Ewa Manthey wrote in a client note. Price action in crude oil and refined fuel markets reflected waning expectations of ongoing supply disruptions from the hurricane, they added.

Texas accounts for more than 40% of crude supplied in the U.S., the world's top producer.

"As we get more reports out of Texas and Houston that things are somewhat flooded but OK, angst leaves the market," said John Kilduff, a partner at Again Capital in New York.

Major Texas oil shipping ports were set to reopen on Tuesday, and some facilities were ramping up output again.

Several refiners such as Marathon Petroleum (NYSE:MPC) were preparing to restart their refining units. [REF/OUT]

Oil investors also had a mixed reaction to comments by Federal Reserve Chair Jerome Powell, who told a Congressional hearing on Tuesday that the economy was no longer overheated and that the job market had eased.

Despite indicating a possible nearing of interest rate cuts, oil prices sank farther after the remarks as a weakening economy could hinder crude demand.

"The comments cut both ways," Kilduff said.

Market participants are also watching the situation in the Middle East. On Monday, oil prices settled down 1% on hopes a possible ceasefire deal in Gaza could reduce worries about global crude supply disruption.

© Reuters. FILE PHOTO: An oil and gas industry worker walks during operations of a drilling rig at Zhetybay field in the Mangystau region, Kazakhstan, November 13, 2023. REUTERS/Turar Kazangapov/File Photo

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 a potential agreement.

"Crude futures were inching lower early Tuesday after a second consecutive session of losses suggested an overdue pullback from (a) nine-week high," said Vandana Hari, founder of oil market analysis provider Vanda (NASDAQ:VNDA) Insights.

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