The price of a barrel of oil rose globally during trading today, Wednesday, June 14 (2023), to continue to reap gains for the second day in a row, amid fears of a supply shortage after Saudi Arabia pledged to provide additional production cuts by one million barrels per day next July.
Today, Wednesday, investors are awaiting the results of the US Federal Reserve meeting in June, key economic data from China and government data on US oil inventories.
The global price of a barrel of oil today
By 06:49 a.m. GMT (09:49 a.m. Mecca time), benchmark Brent crude futures – for August 2023 delivery – rose by 0.46%, to record $74.63 a barrel.
At the same time, US West Texas Intermediate crude futures – for July 2023 delivery – increased by 0.27%, to record $69.61 a barrel, according to figures seen by the specialized energy platform.
And the global price of a barrel of oil ended its trading yesterday, Tuesday, June 13, with an increase of more than 3%, to compensate for most of the losses it lost in Monday’s trading, in the hope of increasing demand for fuel after the Chinese central bank reduced the short-term lending rate.
Oil price analysis
Kelvin Wong, senior market analyst at OANDA, said: “Speculators seem reluctant to push prices higher due to imminent key data and events such as China’s industrial production, retail sales, and May home price index due tomorrow (Thursday), as well as US interest rates. To be announced on Wednesday.
Market participants expect that the US central bank’s Federal Open Market Committee will pause rate hikes, amid uncertainty about both the economic outlook and the delayed effects of the 10 rate hikes since March 2022.
And raising interest rates leads to strengthening the dollar, which makes commodities denominated in the US currency more expensive for holders of other currencies, and affects the price of a barrel of oil globally, and halting the increases would stimulate economic growth and demand for oil, and support prices.
Economists expect the Bank of Canada to raise interest rates again in July to 5%, after a surprising 25bp increase last week.
The European Central Bank is also expected to raise interest rates by another quarter of a percentage point tomorrow, Thursday, to calm stubborn inflation, but the Bank of Japan, which will announce its plan on Friday, is expected to maintain its ultra-loose policy.
US oil stocks
On the supply side, US crude inventories rose by about 1 million barrels in the week ending June 9, according to market sources citing American Petroleum Institute figures, contrary to the average estimate of a 500,000-barrel drop from analysts polled by Reuters.
Government data on inventories is due to be released by the US Energy Information Administration later on Wednesday.
Meanwhile, OPEC+ has given Russia a slightly higher baseline for oil production, which means Russia can produce more under the latest quotas than previously agreed.
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