Supply Constraints And Economic Uncertainties Lift Oil Prices Worldwide
Brent crude saw a notable gain of 75 cents, reaching a price of USD 85.55 per barrel by 0301 GMT. Simultaneously, US West Texas Intermediate crude recorded an increase of 80 cents, settling at USD 82.05 a barrel.
While these figures marked a rebound from previous losses, they followed a week during which both benchmarks ended a triumphant 7-week winning streak, ultimately posting a weekly loss of approximately 2 per cent. This downturn was propelled by the strengthening US dollar, which raised the prospect of prolonged high interest rates. Furthermore, concerns stemming from China's property market turmoil further compounded apprehensions about sluggish economic growth and its potential impact on oil demand.
In the backdrop of these global economic intricacies, supply dynamics have emerged as a pivotal force influencing the oil market. The alliance of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC nations, known as OPEC+, is enacting supply cuts that are contributing to the tightening supply. OPEC+ crude exports are anticipated to decline for the second consecutive month in August, according to preliminary data from shiptracking firm Kpler.
China, the globe's leading importer of crude oil, has undergone noteworthy adjustments in its oil procurement strategy. In July, Chinese refiners recalibrated their purchases, reducing imports from Saudi Arabia by 31 per cent. Meanwhile, Russia remained a steadfast supplier, with its discounted crude playing a crucial role. Chinese customs data revealed that Chinese refiners bolstered exports of refined petroleum products during the same period, capitalising on favorable export margins.
Beyond the boundaries of China, the United States exhibited a decline in the number of operational oil rigs. This gauge, often regarded as an early indicator of future oil output, fell by five to 520 rigs. This count marked the lowest level since March 2022, as reported by Baker Hughes on Friday.
