Brent and WTI futures rise after Saudi Arabia and Russia announced output cuts for August
07 July 2023 - 07:31
byArathy Somasekhar and Sudarshan Varadhan
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Houston/Singapore — Oil prices rose slightly on Friday and were on track for their second straight weekly gain, as resilient demand resulted in a larger-than-expected fall in US oil stocks, offsetting fears of higher US interest rates.
Brent crude futures were up 20c, or 0.3%, at $76.72 a barrel at 3.04 GMT, while US West Texas Intermediate (WTI) crude gained 19c, also 0.3%, to $71.99 a barrel.
Both benchmarks were set to gain about 2% for the second straight week.
“The crude demand outlook is starting to look better as we enter peak summer travel in the US, and as the Saudis were able to raise prices to Europe and Asia,” said Edward Moya, an analyst at Oanda.
US crude stocks fell more than expected on strong refining demand, while petrol inventories posted a large draw after an increase in driving last week, the Energy Information Administration said on Thursday.
That comes as 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.
However, oil price gains were capped by strengthening expectations that the US central bank is likely to raise interest rates at its July 25-26 meeting after holding rates steady at 5%-5.25% in June.
The number of Americans filing new claims for unemployment benefits increased moderately last week, while private payrolls surged in June, data showed on Thursday, raising the likelihood of a Federal Reserve rate hike this month.
Opec is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook later this month, predicting a slowdown from this year but still an above-average increase, sources close to Opec said.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. Investors will look for cues on rate paths from US and China inflation data next week.
“Oil has found a floor this week and it looks like it could head higher as long as global recession fears don’t run wild,” Moya said.
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 heads for weekly gain on steady demand
Brent and WTI futures rise after Saudi Arabia and Russia announced output cuts for August
Houston/Singapore — Oil prices rose slightly on Friday and were on track for their second straight weekly gain, as resilient demand resulted in a larger-than-expected fall in US oil stocks, offsetting fears of higher US interest rates.
Brent crude futures were up 20c, or 0.3%, at $76.72 a barrel at 3.04 GMT, while US West Texas Intermediate (WTI) crude gained 19c, also 0.3%, to $71.99 a barrel.
Both benchmarks were set to gain about 2% for the second straight week.
“The crude demand outlook is starting to look better as we enter peak summer travel in the US, and as the Saudis were able to raise prices to Europe and Asia,” said Edward Moya, an analyst at Oanda.
US crude stocks fell more than expected on strong refining demand, while petrol inventories posted a large draw after an increase in driving last week, the Energy Information Administration said on Thursday.
That comes as 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.
However, oil price gains were capped by strengthening expectations that the US central bank is likely to raise interest rates at its July 25-26 meeting after holding rates steady at 5%-5.25% in June.
The number of Americans filing new claims for unemployment benefits increased moderately last week, while private payrolls surged in June, data showed on Thursday, raising the likelihood of a Federal Reserve rate hike this month.
Opec is likely to maintain an upbeat view on oil demand growth for next year when it publishes its first outlook later this month, predicting a slowdown from this year but still an above-average increase, sources close to Opec said.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. Investors will look for cues on rate paths from US and China inflation data next week.
“Oil has found a floor this week and it looks like it could head higher as long as global recession fears don’t run wild,” Moya said.
Reuters
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