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  5. Crude oil prices: Brent, WTI edge lower as investors brace for storm Beryl's impact

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Crude oil prices: Brent, WTI edge lower as investors brace for storm Beryl's impact

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By Mohammed Uzair Shaikh

3 min read | Updated on July 08, 2024, 07:53 IST

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SUMMARY

Brent slipped by 0.2%, with its futures for September delivery trading at $86.33 a barrel at 0150 hours GMT. Meanwhile, the WTI futures were down 0.5% at $82.75 per barrel.

The taxation rate is determined on the basis of international crude oil rates

The taxation rate is determined on the basis of international crude oil rates

Crude oil prices edged lower in early trade on Monday, July 8, as investors braced for the impact of Beryl, a tropical storm, in the United States.

Global crude benchmark Brent slipped by 0.2%, or 16 cents, with its futures for September delivery trading at $86.33 a barrel at 0150 hours GMT.

The U.S. West Texas Intermediate (WTI), the benchmark US crude, faced a sharper decline as the storm's impact would primarily be felt in the country. The futures for August delivery were trading at $82.75 per barrel, down 0.5% or 44 cents as against the last closing price.

Also Read: India's domestic crude oil production drops in May, imports surge. Details here

American weather forecasters have warned that Beryl could grow into a 'Category 2' hurricane after making landfall on Texas coast later on Monday. As a precautionary measure, the ports of Corpus Christi, Houston, Galveston, Freeport and Texas City were directed to remain closed from Sunday.

The port closures will lead to a temporary pause on the export of crude and liquefied natural gas, and will impact oil shipments to refineries, analysts pointed out.

US oil inventories on watch

In the week ahead, however, oil prices may be positively impacted if data shows a further climbdown in American crude stockpile. There is a good chance that the US oil inventories may drop again as summer demand has picked up, suggested IG analyst Tony Sycamore.

Notably, WTI logged its fourth straight weekly gain last week, rising by 2%. This came in the backdrop of the U.S. Energy Information Administration releasing data that showed American crude stockpile declined by 12.2 million barrels in the week ending June 28, which was the sharpest fall since July 2023.

The uptick in oil prices was also supported by growing optimism over the US Federal Reserve initiating its rate cut cycle in the near future.

Data released last week indicated a softening of the US economy, as the services sector declined in June vis-a-vis May, and the initial unemployment filings rising to a 2.5-year high. This, say analysts, would encourage the Fed to begin slashing the benchmark interest rates, which are at a historic high.

A decrease in the lending rates in the US will lead to an overall spurt in consumption. This is expected to lead to an uptick in crude prices, given the fact that the US remains the world's top oil consumer.

"A slowdown in growth momentum will support disinflationary impulses in coming months, paving the way for the Fed to cut rates," Reuters quoted ANZ Research analysts as saying last week.

About The Author

Mohammed Uzair Shaikh-profile.jpg
Mohammed Uzair Shaikh is a news and features writer with around a decade of experience in journalism. He presently covers markets, business, economy and commodities.

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