Oil Prices Edge Upward
West Texas Intermediate (WTI) and Brent crude oil futures showed modest gains Tuesday amid – from the perspective of at least one market-watcher – remarkable circumstances.
The September WTI contract price added 55 cents Tuesday to settle at $56.77 per barrel. The light crude marker fluctuated between an intraday high of $56.93 and an intraday low of $55.74.
Brent crude oil for September delivery settled at $63.83, reflecting a 57-cent gain for the day.
Although Tuesday’s crude oil price movements were relatively modest, an analyst told Rigzone that something exceptional is occurring in the global oil market.
“What’s happening in oil now is truly incredible,” said Barani Krishnan, senior commodities analyst at Investing.com. “There’s opportunity for brinkmanship by at least three nations, yet only one is playing it to the hilt – Iran.”
Krishnan was referring to a public statement by Iranian Foreign Minister Javad Zarif, who extended his congratulations to incoming U.K. Prime Minister Boris Johnson.
“Tehran has shown how slick it has become in playing the game by taking the lead in striking a conciliatory note with the new U.K. PM and expecting him to fall in line despite the ongoing tanker hostage saga between them,” Krishnan continued. “And the U.S., despite the might of its sanctions against Iran, seems outfoxed in trying to achieve its desired ends with the Islamic Republic.”
Krishnan also observed that a rare scenario is playing out in the Persian Gulf region: tensions are heightened amid a small and inconsistent risk premium for a flat crude oil price. Additionally, Bloomberg reported Tuesday that the recent lack of British-flagged tankers entering the Persian Gulf represents another unusual situation.
“It has now dawned on almost every oil trader, regardless of his bias, that none of the players in this game – be it the Americans, the Brits, the Saudis and/or even the Iranians themselves – want a real war on their hands,” said Krishnan. “That, and persistent worries about demand, has made this market work more for the bears rather than the bulls.”
Reformulated gasoline (RBOB) also edged upward Tuesday. The August RBOB contract price gained three cents to settle at $1.86 per gallon.
Henry Hub natural gas moved in the opposite direction, with August gas futures losing one cent to close at an even $2.30.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.