By Georgina McCartney
LONDON (Reuters) -Oil prices were flat on Tuesday after a European Central Bank official hinted at a possible rate cut in September, offsetting pressure from renewed hopes of a ceasefire in the war in Gaza.
Brent crude futures for September rose 18 cents to $82.58 a barrel by 0947 GMT. U.S. West Texas Intermediate crude for September climbed 16 cents to $78.56 per barrel.
Oil prices declined in the previous two sessions.
European Central Bank Vice-President Luis de Guindos hinted at a possible interest rate cut in September, buoying investor sentiment on Tuesday as lower borrowing costs support oil demand and prices.
The ECB left rates on hold last week but President Christine Lagarde said the next meeting in September was “wide open”, with several policymakers openly considering more cuts as inflationary pressures ease.
“Oil is range-trading, only moderately up, and that support might come from most European stock markets in positive territory, benefiting from a risk on environment,” said UBS analyst Giovanni Staunovo.
In the U.S., some players are also betting on September rate cuts by the Federal Reserve.
In the Middle East, efforts to reach a ceasefire deal between Israel and militant group Hamas, under a plan outlined by U.S. President Joe Biden in May and mediated by Egypt and Qatar, have gained momentum over the past month.
Biden is expected to meet Israeli Prime Minister Benjamin Netanyahu on Thursday at the White House, and the two are expected to discuss ways to reach a ceasefire, as well as Iran and other topics.
The war in Gaza has lent support to oil prices as investors priced in the risk of potential disruptions to global crude supply.
Meanwhile, traders continued to shrug off news of Biden’s decision to call off his reelection bid and endorse Vice President Kamala Harris on Sunday. Citi analysts said they believed neither Harris nor Republican nominee Donald Trump would promote policies that would greatly affect oil and gas operations.
Weighing on prices, Morgan Stanley analysts said fundamentals will likely balance out by the fourth quarter and rise to a supply surplus by next year.
“Any further weakening of demand signals, combined with a resolution in Gaza, could lead to a further decrease in oil prices,” Priyanka Sachdeva, senior market analyst at Phillip Nova said, adding that a swell in U.S. inventories last week would be a sign of dented demand.
The American Petroleum Institute, a trade group, is due to release its estimates for last week’s oil inventories on Tuesday at 4:30 p.m. local time (2030 GMT), while official U.S. government data is scheduled to land on Wednesday.
A preliminary Reuters poll of six analysts estimated that U.S. crude stocks, on average, fell by 2.5 million barrels in the week to July 19, while gasoline stocks likely dropped by 500,000 barrels.
Investors will also be watching out for next month’s mini OPEC+ ministerial meeting, scheduled for Aug. 1, and is unlikely to recommend changing the group’s output policy, three sources told Reuters last week.
This post is originally published on INVESTING.
