Oil prices opened the new month lower on Tuesday as investors engaged in profit-taking following a substantial rally in July.
Brent crude oil, the international benchmark for Nigerian crude oil, slipped by 57 cents to settle at $84.86 a barrel while U.S. West Texas Intermediate crude oil dropped 59 cents to $81.21 a barrel from the previous session’s high.
Tina Teng, an analyst at CMC Markets, expressed concerns over a potential correction risk in oil prices due to the market potentially becoming overbought in the past month.
This cautious sentiment was echoed by PVM analyst Tamas Varga, who attributed the earlier recession worries to investor wariness but noted a shift in July.
Investors are now more confident in a “soft landing” and are less concerned about the possibility of a recession in major economies, thanks to the actions of central banks.
Despite a slump in manufacturing activity in the eurozone, the United States, the world’s largest fuel consumer, witnessed surge in demand for the commodity to its highest level since August 2019.
In response to a sluggish economic recovery in the wake of prolonged COVID-19 restrictions, Chinese authorities announced increased financing support for small businesses in an effort to revive the private sector.
Looking ahead, the OPEC+ meeting scheduled for this Friday is anticipated to see Saudi Arabia continuing its voluntary cuts until September, further tightening global supplies. BP chief Bernard Looney also spoke at a conference on Monday, projecting continuous oil demand growth into the following year, with OPEC+ exhibiting greater discipline.