Forecast of lower US production boosts crude oil prices

Oil prices rose to a two-week high on Tuesday on expectations of lower U.S. oil production, renewed Houthi attacks on shipping in the Red Sea, concerns about U.S. tariffs on copper, and technical short-covering.

Brent crude futures rose 57 cents, or 0.8 percent, to settle at $70.15 a barrel, while U.S. West Texas Intermediate (WTI) crude settled at $68.33, up 40 cents, or 0.6 percent.

In fact, those were the highest closes for both crude oil benchmarks since June 23, for the second day in a row.

Meanwhile, the Mexican export blend rose 53 cents, or 0.83%, to $64.59 a barrel.

“The prospects for lower U.S. production kicked off the price rally, which was supported by other commodities on news of copper tariffs and rising tensions in the Red Sea,” said Phil Flynn, analyst at Price Futures Group.

The United States will produce less oil in 2025 than previously expected, as falling crude prices have led producers to slow their output this year, according to the latest outlook from the Energy Information Administration (EIA).

U.S. President Donald Trump said Tuesday he will announce a 50% tariff on copper, aiming to boost U.S. production of a metal critical to electric vehicles, military hardware, the power grid, and many consumer goods.

Tensions rise

In the Red Sea, three sailors from the Liberian-flagged, Greek-operated bulk carrier Eternity C were killed in a drone and speedboat attack off Yemen, the second such incident in a day after months of calm.

Attacks in the Red Sea have forced ships carrying oil, liquefied natural gas, and other products to travel long distances to avoid the region, driving up energy costs.

Analysts noted that the oil market was supported by technical short covering after Brent crude oil prices surpassed $70 per barrel, a key psychological and technical resistance level.

Furthermore, energy traders noted that rising gasoline and diesel prices in the United States in recent weeks have pushed the diesel crack spread to its highest level since March 2024 and the 3:2:1 crack spread to a six-week high. Crack spreads measure refiners' profit margins.

“The best thing about this complex on the upside is its recent ability to move forward despite a steady stream of seemingly bearish headlines that would normally weigh on oil prices,” analysts at energy advisory firm Ritterbusch and Associates said in a note.