Brent continues its upward thrust

The front-month ICE Brent contract has moved up by $0.45/bbl on the day, to $84.05/bbl at 09.00 GMT.

PHOTO: Oil barrels with a stack of dollars. Getty Images

Upward pressure:

Strong economic data from the US and supply cuts in the crude oil market have helped Brent to continue its upward movement this week. 

The US gross domestic product (GDP) in second quarter grew at 2.4%, Reuters reported on Thursday, citing the US Commerce Department.

On the supply side, Saudi Arabia is expected to extend supply cuts into September, said Price Futures Group’s analyst Phil Flynn. 

“The speculation that Saudi Arabia is going to extend the lollipop production cut until the end of the year and more signs that Russia is acting to rein in production is going to solidify a floor for oil prices,” he added in a note.

Downward pressure:

Brent has been under some pressure after the US Federal Reserve (Fed) hiked interest rates by another 0.25 basis point earlier this week.

The European Central Bank (ECB) also hiked interest rates after the Fed’s announcement on Wednesday. Recent hikes in interest rates from central banks all over the world have been affecting the global demand outlook.

Additionally, oil market analysts have raised concerns about how and when China will roll out new policies to support its economic growth. China recently promised to boost growth in ten domestic sectors.

"We still need to wait for actual policies - the risk is that these policies fall short of expectations," ING’s head of commodities strategy Warren Patterson said, referring to China's recent pledge. 

By Aparupa Mazumder

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