By Adedapo Adesanya
It was bearish for crude futures on Tuesday as expectations of economic stimulus to support the world’s biggest oil consumer appear to slow down.
Brent crude was down by 31 cents or 0.69 per cent to $44.68 per barrel, while the US West Texas Intermediate oil lost 23 cents or 0.55 per cent to trade at $41.71 per barrel.
Both futures rose at the previous session but made a reverse as traders were not satisfied at developments tied to efforts toward economic relief from the impact of the coronavirus.
White House officials and top Democratic lawmakers had indicated they were ready to resume talks on a coronavirus aid package after President Donald Trump over the weekend signed executive orders that would extend some elements of existing help that lapsed at the end of July, though there as little sign of movement.
If they can strike a deal on the support package, analysts said oil will get a short-term boost considering the many factors working against it at the moment.
The commodity had previously found support over recovering Asian oil demand.
On Sunday, Saudi Aramco CEO Amin Nasser said he expects oil demand to rebound in Asia as economies open up.
Also, China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, adding to signs of recovery in the world’s second-largest economy.
However, with no other positive headway in coronavirus-related economic relief talks, the market pointed south.
In a monthly report issued Tuesday, the UD Energy Information Administration (EIA) raised its 2020 forecasts for global benchmark and US oil prices but reduced its US crude production outlook for this year.
The EIA lifted its WTI crude price forecast to $38.50 per barrel, up 2.5 per cent from the July forecast and for Brent crude, it raised this year’s forecast by 2.3 per cent to $41.42 per barrel.
Energy traders will await weekly data on U.S. petroleum supplies, due out from the American Petroleum Institute and the EIA scheduled for Wednesday (Nigerian time).
On average, domestic crude stocks are expected to post a fall of 4.7 million barrels for the week ended August 7, according to a poll of analysts conducted by S&P Global Platts.
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