Oil Prices Settle Lower

Oil prices settled lower on Tuesday, ending a three-session rally as traders assessed demand ahead of fresh U.S. inventory data due this week.

At 14:30 p.m. ET (1830 GMT), Brent oil futures fell 2.3% to $79.55 a barrel, while West Texas Intermediate crude futures fell 2.4% to settle at $75.53 a barrel.

Both crude benchmarks have rebounded approximately 7% over the past three sessions from their lowest levels since early January, driven by expectations of U.S. interest rate cuts that could boost fuel demand, potential closures of Libyan oilfields, and concerns over a wider Middle East conflict disrupting supply from the key producing region.

Goldman Cuts Brent Target Range

Goldman Sachs has lowered its expected trading range for Brent crude oil prices to $70-$85 per barrel, a $5 cut from previous estimates. This revised forecast reflects Goldman Sachs’ cautious outlook on global oil markets.

One primary driver behind this decision is the unexpected stability in OPEC commercial inventories. Contrary to earlier expectations of drawdowns during summer months, inventories have remained higher than anticipated.

This stability is largely due to a surge in U.S. liquids supply, offsetting some seasonal demand. Additionally, weaker demand growth from China significantly contributed to this inventory buildup, affecting the Brent price range by approximately $3-$4 per barrel. The increase in U.S. oil production also notably impacted Goldman Sachs’ revised forecast.

Fresh U.S. Crude Inventory Data Due

The decline in oil prices comes just before fresh weekly domestic inventory data is expected. The American Petroleum Institute is anticipated to report a drop of 3 million barrels in domestic crude inventories for the week ending August 23, one day ahead of the official petroleum report from the Energy Information Administration.

Middle East Tensions Persist Amid No Gaza Ceasefire

Ongoing concerns over a broader conflict in the Middle East, particularly the lack of progress on a Gaza ceasefire agreement, have helped limit oil losses. Israel initiated preemptive strikes against targets in Lebanon, while the Hezbollah group launched rocket strikes on parts of Israel.

Both sides signaled a desire to avoid further escalation, but these strikes have undermined prospects for a potential ceasefire.

*(Peter Nurse, Ambar Warrick contributed to this article.)