Oil prices ease after a sharp rise
Oil prices stalled on Tuesday after gaining more than $5 a barrel ignoring tight supply problems on concerns that rising crude in the previous session will fuel a possible recession to hit demand.
Brent crude futures for September fell 43 cents to $105.84 a barrel as of 0446 GMT. The contract rose 5.1% on Monday, posting its biggest percentage gain since April 12.
WTI crude futures for August delivery were down 28 cents to $102.32 a barrel. The contract rose 5.1% on Monday and recorded its biggest percentage gain since May 11.
The August WTI contract expires on Wednesday, and the more actively traded September futures contract fell 44 cents to $98.98 a barrel.
Oil prices were whipped amid supply concerns as Western sanctions on Russian crude and fuel supplies over the Ukraine conflict disrupt trade flows to refineries and end-users, and rising concerns that FED's efforts to rein in rising inflation could trigger a recession.
Oil prices may have peaked, and the underlying supply/demand imbalance is as tight as ever, but from here on out, unless OPEC takes a surprising decision, a significant drop is unlikely.
US President Joe Biden visited Saudi Arabia, the biggest oil exporter, last week in hopes of reaching an agreement to increase oil production to calm fuel prices. However, officials from Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries (OPEC), did not give a clear assurance that an increase in production would be achieved.
Biden should have been aware that the allies, including Russia, known as OPEC+, are unlikely to increase production more aggressively, and he will need time to digest his visit.
Oil prices were supported by a softer US dollar on Tuesday, holding around a one-week low. A weaker USD, along with the broader commodity complex, provided support.
The forecast for oil inventories in the US, the world's largest consumer of oil prior to API and EIA technical data, is that supplies of crude oil and distillate may have increased over the past week and gasoline inventories are likely to fall.
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