The cuts, along with a bigger than expected drop in US crude stocks, provided some support for prices
06 July 2023 - 13:21
byNatalie Grover
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London — Oil prices were little changed on Thursday as the market digested tighter crude supply alongside fears of global economic slowdown.
Brent crude futures edged up 29c to $76.94 a barrel by 8.38am GMT after a 0.5% gain the previous day.
US West Texas Intermediate crude firmed by 37c to $72.16 after rising by 2.9% in post-holiday trade on Wednesday to catch up with Brent’s gains earlier in the week.
On the supply side, top oil exporters Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than 5-million barrels per day (bpd), equating to 5% of global oil output.
The cuts, along with a bigger than expected drop in US crude stocks, provided some support for prices.
“The oil balance will most likely tighten and so will financial conditions, judging by the Fed minutes released last night,” PVM analyst Tamas Varga said.
“Persistent recession worries will probably encumber, but not prevent, oil from marching higher.”
The market has been expecting interest rates in the US and Europe to rise further to tame stubbornly high inflation while fears of a global recession have been heightened by recent surveys showing that factory and services activity in China and Europe has slowed.
Minutes released on Wednesday showed that a united US central bank agreed to hold rates steady at its June meeting to buy time and assess the need for further hikes, even though most attendees expected they would eventually need to tighten policy further.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil prices hold steady despite output cuts
The cuts, along with a bigger than expected drop in US crude stocks, provided some support for prices
London — Oil prices were little changed on Thursday as the market digested tighter crude supply alongside fears of global economic slowdown.
Brent crude futures edged up 29c to $76.94 a barrel by 8.38am GMT after a 0.5% gain the previous day.
US West Texas Intermediate crude firmed by 37c to $72.16 after rising by 2.9% in post-holiday trade on Wednesday to catch up with Brent’s gains earlier in the week.
On the supply side, top oil exporters Saudi Arabia and Russia announced a fresh round of output cuts for August. The total cuts now stand at more than 5-million barrels per day (bpd), equating to 5% of global oil output.
The cuts, along with a bigger than expected drop in US crude stocks, provided some support for prices.
“The oil balance will most likely tighten and so will financial conditions, judging by the Fed minutes released last night,” PVM analyst Tamas Varga said.
“Persistent recession worries will probably encumber, but not prevent, oil from marching higher.”
The market has been expecting interest rates in the US and Europe to rise further to tame stubbornly high inflation while fears of a global recession have been heightened by recent surveys showing that factory and services activity in China and Europe has slowed.
Minutes released on Wednesday showed that a united US central bank agreed to hold rates steady at its June meeting to buy time and assess the need for further hikes, even though most attendees expected they would eventually need to tighten policy further.
Reuters
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