Oil prices consolidated their gains by more than 1% at the end of today’s trading, Wednesday, July 12 (2023), as the price of a barrel of Brent crude exceeded the $80 level for the first time since April (2023), with the decline of the US dollar after US data showed a slowdown. inflation.
Oil prices declined marginally during trading today, Wednesday, July 12, in light of growing fears of an economic recession that may limit demand.
The markets started their morning trading higher for the second session in a row, supported by fears of supply shortages by the world’s two largest oil exporters, Saudi Arabia and Russia, but gave up their early gains at a later time.
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 boosted demand for crude.
Oil prices today
At the end of the session, benchmark Brent crude futures – for September 2023 delivery – rose by 0.9% to $80.11 a barrel, marking the highest close since late April 2023.
US West Texas Intermediate crude futures – August 2023 delivery – rose 1.2% to $75.75 a barrel, according to figures seen by the specialized energy platform.
And oil prices ended their dealings yesterday, Tuesday, July 11, 2023, an increase of about 2.5%, with traders focusing on reducing production by Saudi Arabia and Russia, in addition to the weakness of the dollar.
Oil price analysis
“Crude oil prices are getting a boost as expectations grow that the oil market will remain tight despite all the lingering growth concerns,” said Edward Moya, senior analyst at OANDA.
Saudi Arabia, the world’s largest oil exporter, pledged last week to extend production cuts by 1 million barrels per day in August, while Russia will cut exports by 500,000 barrels per day.
Projected demand from the US Energy Information Administration will exceed supply by 100,000 barrels per day in 2023, and by 200,000 barrels per day in 2024.
The IEA said the oil market should remain tight in the second half of 2023, citing strong demand from China and developing countries along with recently announced supply cuts by major exporters Saudi Arabia and Russia, among others.
“The short-term outlook for crude oil demand shouldn’t be that bad because everyone is taking a vacation that requires some travel this summer,” Moya added.
US oil stocks
The weekly report of the US Energy Information Administration showed that oil stocks in the United States increased by about 5.9 million barrels for the first time in 4 weeks, distillate stocks also rose, while gasoline stocks stabilized, and analysts polled by Reuters expected an increase in crude stocks by 500 thousand barrels.
While the consumer price index in the United States slowed to 3%, on an annual basis, compared to 4% in the previous month, recording the smallest pace of increase since March 2021.
Markets are pricing the prospect of a rate hike at 92%, an increase of 25 basis points later this month, according to data seen by the specialist energy platform.
Higher rates can slow economic growth and reduce demand for oil, and vice versa.
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