Oil prices slip as concerns over hurricane damage ease

[July 09, 2024]  By Noah Browning

(Reuters) - Oil prices slipped on Tuesday after a hurricane that hit a key U.S. oil-producing hub in Texas caused less damage than markets had expected, easing concerns over supply disruption.

Brent futures fell 39 cents or 0.45% to $85.36 a barrel by 1111 GMT, while U.S. West Texas Intermediate (WTI) crude slipped 44 cents or 0.53% to $81.89.

Although oil refining activity slowed and some production sites were evacuated, major refineries along the U.S. Gulf Coast appeared to see minimal impact from Hurricane Beryl, which weakened into a tropical storm after hitting the Texas coast.

"Early indications suggest that most energy infrastructure has come through unscathed," ING analysts Warren Patterson and Ewa Manthey wrote in a client note, adding that price action in crude oil and refined fuel markets reflect little concern on supply disruption from the hurricane.

That eased market worries about the risk of supply disruption in Texas, where 40% of U.S. crude oil is produced.

Major oil-shipping ports around Corpus Christi, Galveston and Houston had been shut ahead of the storm. The Corpus Christi Ship Channel reopened on Monday and the Port of Houston was projected to resume operations on Tuesday afternoon.

Several key refiners such as Marathon Petroleum were also preparing to restart their refining units. [REF/OUT]

Market participants are also keeping an eye on the situation in the Middle East for more trading cues. Oil prices settled down 1% on Monday amid hopes a possible ceasefire deal in Gaza could reduce worries about global crude supply disruption.

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 the 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 Insights.

Markets were also waiting for the release of key U.S. inflation data, with Federal Reserve Chair Powell set to appear before Congress on Tuesday and Wednesday, as investors wagered a slew of soft labour market data has greatly increased the chance of an interest rate cut in September to about 80%.

The "market will find a sympathetic bid if Powell's comments are indeed friendly to a rate cut and if the U.S. CPI backs such language with a lower reading," said John Evans, analyst at oil broker PVM.

(Additional reporting by Arunima Kumar, Colleen Howe and Trixie Yap; editing by Sherry Jacob-Phillips and Jason Neely)

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