Oil steady on Tuesday

Oil prices steadied after a two-day decline amid quiet summer trading, with focus on the US dollar and monetary policy.

Brent crude traded below $85 a barrel, and West Texas Intermediate (WTI) hovered near $82. The US dollar strengthened for a second day following the attempted assassination of presidential contender Donald Trump, creating headwinds for commodities.

Federal Reserve Chair Jerome Powell noted increased confidence in controlling inflation, potentially leading to lower borrowing costs and a weaker dollar. Crude prices have risen this year due to OPEC+ supply cuts and anticipated US interest rate reductions. However, China’s economic slowdown, with growth at its lowest pace in five quarters, poses a significant risk.

Vivek Dhar from Commonwealth Bank of Australia highlighted that China’s weak consumer confidence could pressure oil prices further. The ongoing Third Plenum is unlikely to yield significant policy reforms given the fragile economy.

Oil trading remains subdued, with Brent’s implied volatility at its lowest level since 2015.

Attribution: Bloomberg