Oil futures: Prices edge up amid mixed signals, Brent above $107/b
Quantum Commodity Intelligence - Crude oil futures Tuesday were climbing higher as markets remained embroiled in a tug of war, caught between recessionary concerns and slowing demand on the one side versus tight physical supplies on the other.
Front-month September ICE Brent futures were trading at $107.32/barrel (1900 GMT), compared to the day's earlier low of $103.60/b and Monday's settle of $106.27/b.
At the same time, September NYMEX WTI was trading $100.64/b, versus Monday's settle of $99.42/b, while Aug22 was trading $104.09/b heading into expiry.
Crude markets had started the week on a firm footing, gaining over 4% Monday, as the Biden visit to Saudi Arabia failed to secure any immediate output hike, while the debate from the Saudi side shifted back to diminishing spare capacity and the broader energy investment climate.
However, with the current OPEC+ agreement coming to an end, some analysts see Aramco continuing with production increases beyond August.
"While President Biden's visit to Saudi Arabia produced no immediate oil deliverable, we do anticipate an announcement of more barrels from the Kingdom and the remaining handful of producers with spare capacity at the next OPEC meeting," said RBC Capital Markets in its latest report.
"Barring a major move lower in Brent prices on the back of recessionary concerns, we think there will be an incremental add in the range of the previous monthly increases for September," added RBC.
Prices found support as the dollar continued to retreat, with the dollar index down around 0.8% to 106.55 points.
Investors were also focused on developments in the European natural gas market as Gazprom informed customers it could not guarantee gas supplies because of "extraordinary" circumstances, invoking a retrospective force majeure.
The row over the missing turbine also drags on, although on Monday, the Russian newspaper Kommersant reported that Canada would fly the Nord Stream turbine back to Russia. There has been no official confirmation.
In preparation for reduced Russian gas supplies, the head of the IEA has urged European governments to start up oil-fired and coal-fired power stations to conserve gas ahead of winter.
Oil markets were initially pegged back Tuesday as two of China's biggest cities ordered residents to undergo mass Covid-19 tests this week, prompting fears of fresh mobility restrictions.
Authorities in Tianjin, a northeastern metropolis of more than 13 million people, ordered citywide tests on residents, while Shanghai's government said it would require residents across nine districts and other administrative zones to take two Covid-19 tests over a three-day period from Tuesday.
Cases were also rising in parts of the US, including large urban areas such as Chicago and the San Francisco Bay area.
