Oil futures rose Tuesday, finding support as equity markets rose and as investors paid attention to potential for a tightening of the U.S. supply picture.
West Texas Intermediate crude for September delivery
was up 74 cents, or 1.8%, at $42.68 a barrel on the New York Mercantile Exchange, while the global benchmark, October Brent crude
was 58 cents higher, up 1.3%, at $45.57 a barrel on ICE Futures Europe.
“Oil prices are taking their cues from the firmer tone for stock markets, as well hopes that U.S. policy makers will eventually do the right thing and agree on some form of fiscal package,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note. “Brent prices also appear to be closing in on the 200-day moving average, which could well act as some form of resistance on a short-term basis.”
The 200-day moving average for the Brent contract stood at $47.30 a barrel on Tuesday, according to FactSet.
White House officials and top Democratic lawmakers on Monday 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. Those measures, meanwhile, face legal and logistical hurdles. Trump, meanwhile, late Monday said the administration was considering a cut in the tax rate on capital gains, which analysts said helped fuel gains for stock-index futures.
Analysts at JBC Energy, a Vienna-based consulting firm, noted that data showed U.S. rigs and frack fleets continued to fall week-over-week. Continued declines “could speak for further downside risk to U.S. supply relative to our current forecast of 10.8 million barrels a day” through the second half, they said.
On the demand side, meanwhile the analysts said their compound road-fuel demand indicator continued to trend largely flat on an aggregated global basis as well as in major parts of Europe and North America.