Oil Steadies Around 2-Month High on Travel Hopes
2024-07-02
Summary:
Oil prices remained steady on Tuesday, near two-month highs, due to expected rising fuel demand from the travel season.
Oil prices were little changed on Tuesday, holding near the two-month highs reached in the previous session, on expectations for rising fuel demand from the travel season.
The American Automobile Association has forecast that travel during the holiday period will be 5.2% higher than in 2023 as the summer travel season picks up with the Independence Day holiday this week.
On the supply side, markets were planning for possible disruptions. Forecasts currently show Hurricane Beryl likely moving into Mexico's Bay of Campeche and causing problems for oil production there.
US factory activity contracted slightly for a third straight month in June thanks to high borrowing costs, restrained business investment in equipment and uneven consumer spending.
The Caixin manufacturing purchasing managers index climbed to 51.8 last month, the strongest reading since May 2021. Even so, worries over the outlook for the world's second largest economy remained.
The prospects for overseas shipments are uncertain amid rising trade barriers erected by major partners while businesses and consumers are reluctant to spend amid property woes and tough labour market.
Brent crude is facing the resistance at $88 hit in April but more tailwinds might be necessary for a decisive jump above that. The continuation of rally from the current level will hinge on if $84.5 is respected.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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