After Gaining In July, Oil Price Falls On Hints Of Profit-taking
Oil prices edged lower on Tuesday on signs of profit-taking after rallying in July when investors wagered on tightening global supplies and demand growth in the second half of the year.
Brent crude futures for October were at USD 84.86 a barrel at 1328 GMT, down 57 cents. Front-month Brent settled at its highest since 13 April on Monday.
US West Texas Intermediate crude futures were at USD 81.21 a barrel, down 59 cents from the previous session's settlement, which was its highest since 14 April.
"Oil prices may face a correction risk as the markets may have been overbought in the past month," said Tina Teng, an analyst at CMC Markets.
PVM analyst Tamas Varga noted that for months, predictions have been made that global oil demand will grow in the second half of 2023, versus the first half, in tandem with supply cuts to reduce global oil inventories.
Recession worries made investors more cautious earlier in the year, he said.
"Then July arrived and the mood has promptly changed," he added, citing the action of central banks that has investors more confident that a "soft landing" is achievable and recession avoidable in major economies.
The latest figures from the United States - the world's biggest fuel consumer - showed fuel demand rose the highest level since August 2019. A Reuters poll also estimated US crude oil and gasoline stockpiles were expected to have declined last week.
To revive the private sector amid a flagging economic recovery following a protracted period of Covid restrictions, Chinese ministries, regulators and the central bank on Tuesday pledged more financing support to small businesses.
Meanwhile, data released on Monday showed manufacturing activity in the eurozone contracted in July at the fastest pace since May 2020, tempering enthusiasm.
On the supply side, this Friday's OPEC+ meeting is expected to see Saudi Arabia roll its voluntary cuts through September, further tightening supplies.
In a conference on Monday, BP chief Bernard Looney presaged oil demand growth continuing into next year and OPEC+ being increasingly disciplined.
"(This creates) a situation where you'd describe the outlook for oil prices to be strong over the coming months and years."
