As supply issues outweigh demand concerns, oil prices remain stable in early trade

29 Aug 2023 , 09:55 AM

Tuesday’s oil prices remained unchanged as fears about a tropical storm near the US Gulf Coast could affect supply and offset worry that any potential U.S. interest rate increases could reduce demand.

Brent crude had fallen 2 cents to $84.40 per barrel, while U.S. West Texas Intermediate had fallen 3 cents to $80.07.

Investors are anticipating important U.S. economic statistics that will be released later this week and assist to shape interest rate trends for the upcoming year. Jerome Powell, the chair of the Federal Reserve, stated on Friday that additional rate increases may be required to curb persistent inflation.

According to Refinitiv’s FedWatch tool, markets expect an 80% chance of the Fed keeping interest rates unchanged next month, but a rate hike in November is now seen as being likely at about 56%. 

While moving towards Florida, Tropical Storm Idalia pounded western Cuba on Monday and nearly became a hurricane. On the eastern part of the U.S. Gulf Coast, the storm may affect petroleum production and result in power disruptions.

The U.S. personal consumption expenditures price index report scheduled on Thursday and the August nonfarm payrolls data due on Friday will be the main topics of discussion this week.

Investors are still cautious about China’s economic recovery and are concerned about the country’s demand as the second-largest oil user in the world.

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