Oil prices dip as market awaits EIA report

Oil prices dipped on Tuesday as traders awaited an inventory report from the US Energy Information Administration and began looking toward declining demand at the end of the summer driving season in early September.

Brent crude futures settled at US$66.12 a barrel, down 51 cents, or 0.77 per cent. US West Texas Intermediate crude futures finished at US$63.17, down 79 cents, or 1.24 per cent.

“It really is seasonal factors,” said John Kilduff, a partner at Again Capital. “We’re not getting any lift from the stock market and the inflation report was positive and points to a rate cut.”

US consumer prices increased in July as tariff-induced rising costs for imported goods helped to drive the strongest gain in six months for one measure of underlying inflation.

Kilduff said demand for diesel, which has driven oil demand, appeared to be flagging. Inventory reports from the American Petroleum Institute and EIA on Tuesday and Wednesday, respectively, may show signs of falling demand.

Outlooks issued by Opec and the EIA pointed to increased production this year, but both expect US output to decline in 2026 while other regions of the globe will increase oil and natural gas production.

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Opec’s monthly report on Tuesday said global oil demand will rise by 1.38 million barrels per day in 2026, up 100,000 bpd from the previous forecast. Its 2025 projection was left unchanged.

US crude production will hit a record 13.41 million bpd in 2025 due to increases in well productivity, though lower oil prices will prompt a fall in output in 2026, the EIA forecast on Tuesday in a monthly report.

The decline in 2026 production to 13.28 million bpd would be the first drop in output since 2021 for the world’s largest producer.

Prices for the international benchmark Brent will average US$51 per barrel next year, down from the EIA’s previous forecast of US$58 per barrel, after Opec and its members decided to accelerate the pace of production increases.

This week, US President Donald Trump extended a tariff truce with China to Nov 10, staving off triple-digit duties on Chinese goods as US retailers prepared for the critical end-of-year holiday season.

Also potentially weighing on the oil market, Trump and Russian President Vladimir Putin are due to meet in Alaska on Friday to discuss ending Russia’s war in Ukraine.

“If Friday’s meeting brings a ceasefire or even a peace deal in Ukraine closer, Trump could suspend the secondary tariffs imposed on India last week before they come into force in two weeks,” Commerzbank said in a note.

“If not, we could see tougher sanctions against other buyers of Russian oil, like China.” REUTERS