Sunday, July 14, 2024

Oil rises amid expectations of supply cuts

Date:

Oil prices rose in early Asian trade on Friday, after falling 1 percent in the previous session, as the market assessed support for supply conditions ahead of the International Energy Agency’s monthly demand forecast.

By 0035 GMT, Brent crude futures were up 17 cents, or 0.2 percent, at $86.26 a barrel. U.S. West Texas Intermediate crude futures were up 20 cents, or 0.2 percent, at $82.36 a barrel.

Prices were supported by expectations of supply shortages due to expected lower production in Russia.

“Russian exports are showing signs of easing, with production shrinking by 700,000 barrels per day,” analysts at ANZ Bank said in a note to clients on Friday morning.

In terms of demand, investors will focus on the International Energy Agency’s monthly oil market report.

The Organization of the Petroleum Exporting Countries (OPEC) monthly report, released on Thursday, pointed to risks of oil demand falling in the summer due to weak growth, tightening monetary policy and instability in the global financial sector.

However, Chinese trade data released on Thursday showed crude oil imports rose 22.5 percent year-on-year in March, boosting hopes for China’s economic recovery.

The slightly higher prices on Friday come at the end of a week in which they hit the highest levels in more than two months, thanks to data showing US inflation and a weaker dollar.

WTI is up 2% since the start of the week, while Brent crude is up 1.3%, both posting their fourth straight week of gains.

The dollar index closed at its lowest level since early February yesterday, Thursday, after the release of consumer and producer price data in the US this week, reinforcing expectations that the Federal Reserve (US central bank) is approaching. The end of the rate hike cycle.

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A weaker dollar makes dollar-denominated oil cheaper for investors holding other currencies, which increases demand.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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