Oil futures edged higher early Tuesday as Idalia strengthened into a hurricane that is expected to make landfall in Florida within a day.
West Texas Intermediate crude for October delivery
rose 56 cents, or 0.7%, to $80.66 a barrel on the New York Mercantile Exchange.
October Brent crude
the global benchmark, was up 64 cents, or 0.8%, at $85.06 a barrel on ICE Futures Europe. November Brent
the most actively traded contract, advanced 65 cents, or 0.7%, to $85.07 a barrel.
The National Hurricane Center warned early Tuesday that Idalia was expected to intensify into an “extremely dangerous major hurricane before landfall along the west coast or Big Bend region of Florida.”
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Oil prices steadied on the prospect the storm could affect crude production in the Gulf Coast, according to a note from Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Crude has rallied this summer in response to supply cuts from the Organization of the Petroleum Exporting Countries and its Russia-led allies — a group known as OPEC+. An additional, voluntary cut of 1 million barrels a day by Saudi Arabia that began in July and is set to run at least through September has been cited as a particular pillar of support.
But worries over the global economic outlook have served to limit upside. China’s economic data has routinely disappointed, while the country’s troubled property sector has amplified concerns about demand from the world’s second-largest crude consumer.
Meanwhile, Federal Reserve Chair Jerome Powell signaled last week further rate increases may be needed to bring down inflation, denting hopes for a so-called soft landing in which a recession or sharp slowdown is averted.