June 27 (Reuters) – Oil prices edged lowerr on Tuesday, spurred by worries about political instability in Russia and possible supply disruptions, as well as U.S. demand hopes ahead of the summer driving season. A clash between Moscow and Russian mercenary group Wagner was averted on Saturday after the heavily armed mercenaries withdrew from the southern city of Rostov under a deal that halted their rapid advance on the capital. Following the weekend’s events, ANZ analysts said, the complacency among traders about Russian oil continuing to seep into the international market could no longer be assumed to the same extent.
“This is likely to lead to a risk premium being applied to the oil price amid the risk of further civil unrest,” they added in a note.
The challenge has fed questions about President Vladimir Putin’s grip on power and some concern about possible disruption of Russian oil supply, although loadings have kept on schedule. Lower supply has already been on investors’ minds, after
Saudi Arabia’s pledge to cut output from July. “An additional 1 million barrels per day (bpd) unilateral cut by Saudi Arabia, set to take effect in July, coupled with seasonally stronger demand, should help to physically tighten the market in Q3,” BMI Research analysts said in a client note.
“The American Automobile Association estimates 43 million motorists will drive 50 miles or more from their homes this Independence Day weekend. That is 4% more than 2019,” the ANZ analysts added.
Global gasoline demand grew by 365,000 bpd year on year, driven by strong U.S. gasoline data, with consumption at an eight-week high of 9.4 million bpd in the week of June 17, JP Morgan analysts said in a note. NN: Gentleman start your Engines. Its North America driving season and consumption of all transportation fuels has already started to climb. How long can the markets deny demand is anyones guess.