Last Update: July 06, 2023, 02:30 AM IST
Saudi Arabia, the world’s biggest crude exporter, said on Monday it would extend its voluntary production cut of 1 million barrels per day (bpd) until August. (Photo: Reuters)
US West Texas Intermediate crude (WTI) settled at $71.79 a barrel, up $2, or 2.9%, from Monday’s close.
US crude rose nearly 3% on Wednesday, narrowing the price gap with global benchmark Brent in response to a holiday after Saudi Arabia and Russia announced supply cuts on Monday, as market participants braced for a July Fourth US demand data was awaited for the weekend.
US West Texas Intermediate crude (WTI) settled at $71.79 a barrel, up $2, or 2.9%, from Monday’s close. Brent crude futures rose 40 cents, or 0.5%, at $76.65 a barrel after gaining $1.60 a barrel on Tuesday.
There was no WTI settlement on Tuesday due to the US holiday, so trading on Wednesday matched Brent’s gains on the previous day. Both the benchmarks touched their highest levels in nearly two weeks during Wednesday’s session.
Saudi Arabia, the world’s biggest crude exporter, said on Monday it would extend its voluntary production cut of 1 million barrels per day (bpd) until August. Meanwhile, Russia and Algeria are reducing their August production and export levels by 500,000 bpd and 20,000 bpd respectively.
Saudi Energy Minister Prince Abdulaziz bin Salman said on Wednesday that Russia-Saudi oil cooperation is still going strong as part of the OPEC+ alliance, which will do “whatever is necessary” to support the market.
“Voluntary cuts in July and an expansion in August should provide considerable strength to the oil market, but investors will remain on edge until there is a substantial decline in stockpiles,” said UBS analyst Giovanni Stanovo.
US crude and gasoline stockpiles declined last week, while distillate stockpiles are likely to rise, an extended Reuters poll showed ahead of weekly data from the American Petroleum Association after 4:30 p.m. EDT (2030 GMT), which Government data came later on Thursday. Both the reports have been delayed by a day due to the holiday.
Traders said the Fourth of July is the peak of the US travel season and this week’s inventory report could play a big role in driving oil prices higher or lower.
“I think this limits the volatility in the price. It seems that investors are in a world of ‘what I see is what I believe’,” Staunovo said.
Morgan Stanley downgraded its oil price forecast, predicting a market surplus in the first half of 2024 with non-OPEC supply forecasting to grow faster than demand next year.
Recent surveys showed a decline in global factory activity, reflecting sluggish demand in China and Europe.
Market attention is also focused on interest rates, with US and European central banks expected to hike rates further to control extremely high inflation.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
