Oil prices in Asian trading on Tuesday showed a slight decline after gains in the previous session, reflecting cautious sentiments over global demand growth and expectations of increased supplies.
Brent crude futures, the global benchmark, decreased by 13 cents to $84.12 per barrel as of 0316 GMT, a drop of 0.15%. Meanwhile, U.S. West Texas Intermediate crude futures rose by 14 cents to $80.19 per barrel, an increase of 0.17%.
On Monday, both benchmarks recorded gains of around 2%, reaching their highest levels since April.
According to Francisco Blanch, a strategist at BoFA specializing in commodities and derivatives, the oil market has refocused on fundamental factors, which have been weak recently. He noted that crude oil inventories globally and storage of refined products in places like the United States and Singapore have increased.
Blanch also highlighted that global oil demand growth slowed to 890,000 barrels per day year-on-year in the first quarter, with indications suggesting further deceleration in the second quarter.
Statistics from China's National Bureau of Statistics on Monday showed a 1.8% decline in oil refinery output compared to the previous year in May, attributed to planned maintenance and pressured processing margins due to higher crude costs.
Market attention remains on upcoming signals regarding interest rates and U.S. demand prospects, with several U.S. Federal Reserve representatives scheduled to speak on Tuesday.
Some analysts maintain a bullish outlook on oil prices following OPEC+'s decision to extend supply cuts. Patricio Valdivieso, Vice President and Global Lead of Crude Trading Analysis at Rystad Energy, highlighted the impact of OPEC+'s guidance on supply growth for 2024 and potential production risks in 2025.
Investor sentiment has improved since OPEC+ surprised the market with plans to begin increasing production starting October. Hedge funds and other investors have shown renewed interest, buying significant volumes in major petroleum futures and options contracts.
Recent improvements in refining margins, particularly in Europe and Asia, have also provided support to the market, noted Neil Crosby, an analyst at Sparta Commodities. Refining margins at a typical complex refinery in Singapore averaged $3.60 per barrel in June, compared to $2.66 per barrel in May.
Paraphrasing text from "Reuters" all rights reserved by the original author.
