Last Update: July 05, 2023, 02:07 AM IST
New York, United States (USA)
US markets were closed on Tuesday for the Independence Day holiday. (Photo: Reuters)
Oil benchmarks closed down nearly 1% in the previous session as a gloomy macroeconomic outlook erased early gains.
Oil prices rose 2% on Tuesday as a weakening global economic outlook weighed on August supply cuts by top exporters Saudi Arabia and Russia.
Saudi Arabia said on Monday it would extend its voluntary production cut of 1 million barrels per day (bpd) until August, while Russia and Algeria voluntarily raised their August production and export levels to 500,000 bpd and 20,000 bpd, respectively. asked to reduce.
If fully implemented, there would be a combined shortfall of 5.36 million bpd from August 2022 – possibly even more as many countries in the OPEC+ producer group are unable to meet their output quotas, said PVM analyst Tamas Varga.
Total cuts now exceed 5 million bpd, or 5% of global oil production.
On Tuesday, Brent crude futures closed up $1.60 at $76.25 a barrel. US West Texas Intermediate crude was trading up $1.44 at $71.23.
Andrew Lipo, president of Houston-based Lipo Oil Associates, said, “Clearly, the Saudis are actively and pre-emptively seeking to stabilize the price of crude oil reaching $80 a barrel in order to maintain their domestic budget.” taking steps.”
Still, markets will wait for confirmation of Russia’s announced cuts, and concerns remain that higher interest rates will have an impact on global demand, Lipo said.
Oil benchmarks closed down nearly 1% in the previous session as a gloomy macroeconomic outlook erased early gains.
US markets were closed on Tuesday for the Independence Day holiday.
Despite Monday’s announcements, little has changed in oil dynamics, said OANDA analyst Craig Erlam. “Only a significant break above $77 will signal that something has changed, otherwise range-bound trading may well continue.”
Business surveys showed global factory activity slumped due to sluggish demand in China and Europe, and US manufacturing also fell in June to the previous level recorded in the first wave of the COVID-19 pandemic.
Some analysts said this widespread uncertainty is likely to impact OPEC+’s efforts to strengthen supply.
Commerzbank analysts said that even before the latest cut announcements, data from the International Energy Agency (IEA) showed the oil market was set to show a supply deficit of around 2 million bpd in the third and fourth quarters.
Oil prices did not rally much after the news, mainly due to demand concerns on China’s sluggish economic recovery after the lifting of pandemic restrictions.
Meanwhile, interest rates in the US and Europe are expected to rise further to address persistently high inflation, analysts said.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
