Crude oil prices continued to consolidate their gains, to about 2.5%, by the end of trading today, Tuesday, July 11 (2023), with traders focusing on reducing production by Saudi Arabia and Russia, in addition to the weakness of the dollar.
The reduction in oil production by the two largest crude exporters in the world, namely Saudi Arabia and Russia, led to a decrease in global supplies and supply at rates that are still growing at the present time, according to a report published by Reuters, and viewed by the specialized energy platform.
The extension of the voluntary reduction in production by some countries of the OPEC + coalition, until the end of next August (2023), contributed to raising oil prices, at a time when the US dollar fell to its lowest level in two months, which boosts demand for crude.
On the other hand, the US Energy Information Administration raised its forecast for oil demand growth in 2023, but lowered its estimates for demand for the next year (2024).
Oil prices today
At the end of the session, benchmark Brent crude futures – for September 2023 delivery – rose by 2.2%, to $79.40 a barrel.
US West Texas Intermediate crude futures – August 2023 delivery – rose 2.5% to $74.83 a barrel, according to figures seen by the specialized energy platform.
The decline of the US dollar to its lowest levels in two months, leads traders and holders of other currencies to think that crude oil is cheaper, which in turn boosts demand for oil, at a time when the supplies in the markets are gradually tightening due to the voluntary cut.
It is noteworthy that oil prices had achieved a partial recovery during yesterday’s trading, Monday, July 10, 2023, before declining slightly at the end of the sessions, so that the benchmark Brent crude fell below $ 78 a barrel, but it remains higher than last week’s levels, which did not exceed the barrier. The $76.
Oil price analysis
Wanda analyst Edward Moya said that crude oil has found solid ground now, and that trend may be broken if US inflation is strong and the Federal Reserve is forced to tighten its measures to confront this crisis, especially if the economy enters a recession.
US Federal Reserve officials had announced that the central bank would likely need to raise interest rates further to bring down inflation, which took comfort in the markets from indications that officials also believe that the current monetary policy tightening cycle is coming to an end.
In turn, CMC Markets analyst Tina Ting said that China’s decision to strengthen support for its real estate sector in order to further enhance confidence helps in the sudden rise in oil prices, as data related to new yuan loans, the trade balance and US inflation will be closely monitored by markets in the coming days.
At the same time, traders are looking forward to US oil inventories data, which is expected to be released later today, Tuesday, July 11, 2023, by the American Petroleum Institute, as analysts expect quantities to increase by about 200,000 barrels.
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