Investing.com – Oil prices edged higher on Tuesday as traders waited for new supplies to weigh expectations for a recovery in demand as the summer season approaches.
At 2:30 PM ET (18:30 GMT), futures prices fell 1.5% to $81.57 per barrel and the contract rose 1.3% to $85.33 per barrel.
US stocks in focus
The latest forecast for US crude oil inventories will be released later in the session, with its estimate released ahead of Thursday’s data. This is one day later than usual given the public holiday of Wednesday June.
These crude inventories are expected to fall by 2.3 million barrels in the week to June 14, according to analysts polled by Reuters.
The consensus was for oil prices to rise into the third quarter, Bank of America said, but it is not yet clear whether balance sheets will be strong enough in the third quarter of 2024 to turn the market from a large apparent surplus in a shortage that could cause prices to rise.
Extensive OPEC+ cuts will help, especially if compliance is high and Russia, Iraq and Kazakhstan make up for the lack of compliance during the summer months. However, if inventory build-up continues in the third quarter, oil prices and structure are likely to come under pressure, the bank added.
The new inventory data will help investors gauge the balance between supply and demand at a time when many are pinning their hopes on a traditional summer demand surge.
Uncertainty about demand, supply equilibrium
Both crude contracts rose about 2% on Monday to close at their highest levels since April, buoyed by expectations that the Northern Hemisphere’s summer holiday season will boost fuel demand this summer.
However, the global benchmark, Brent, remains far from the $90 peak of mid-April.
“As tensions in the Middle East eased in April and perceived risks of supply disruptions subsided, the oil market shifted its focus back to fundamentals, which have been weak for some time,” Bank of America analysts said in a note from June 17.
Supply growth contributed to the surplus, but demand also played a role as consumption growth markedly slowed, with the first quarter averaging 890,000 barrels per day (b/d) on an annualized basis, compared to an average of 2.1 million barrels per day 2024.
Data from China this week pointed to a faltering recovery in the world’s second-largest economy, which is also the world’s largest importer of crude oil.
In the US, yields rose just 0.1% in May, according to data released earlier Tuesday, below the expected 0.3%.
This suggested that US consumers are feeling the pressure of high interest rates, impacting discretionary spending and potentially economic activity.
Traders also looked for further clues on interest rates and how US demand will develop as several Federal Reserve officials are scheduled to speak later on Tuesday.
