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Oil edges higher, buoyed by tighter supplies

By July 24, 2023No Comments

Oil prices rose today, buoyed by evidence of tightening supplies and economic stimulus in slow-recovering China.

Brent futures were up $1.02 at $80.66 a barrel by 1134 GMT, while US West Texas Intermediate (WTI) crude climbed $1 to $76.65 a barrel.

“The supply deficit that had been looming in the second half of the year is now backed up by hard figures,” Commerzbank analysts said, citing recent data indicating China and India’s imports of crude oil from Russia had hit an all-time high in June.

However, buying interest from India is likely to weaken, given narrowing discounts and payment problems. Meanwhile, in early July Russia joined Saudi Arabia in cutting output for August.

“Demand from China and India could therefore shift more towards other suppliers, which would push up oil prices,” the analysts said.

In the US, crude inventories have also fallen, supported by a jump in crude exports as well as higher refinery utilisation, the Energy Information Administration (EIA) said on Wednesday.

“That tightness in supply is already showing up in inventories,” analysts from ANZ Bank said.

Meanwhile, investors welcomed stimulus measures designed to reinvigorate China’s sluggish economy.

Latest figures from the world’s second-biggest oil consumer suggest the rate of gross domestic product growth in the second quarter augurs a miss of the government’s 5% annual growth target.

On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics.

“The announcement remains short on detail but notions of China buying more cars gives rise in hope for oil investor bulls,” PVM analyst John Evans said.

Article Source: Oil edges higher, buoyed by tighter supplies – RTE

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