Brent continues to draw support from OPEC+ supply cuts and demand optimism
The front-month ICE Brent contract has increased by $1.83/bbl on the day, to $79.70/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Supply-side dynamics continue to support Brent futures after OPEC+’s de facto leader Saudi Arabia along with Russia and Algeria pledged to continue crude production cuts into August, amounting to an output reduction of a little over 1.5 million b/d.
Brent felt more upward momentum as the oil market shook off skepticism about Russia’s commitment to cut oil output. “Data suggests that Russia is showing signs of compliance even though it may have something to do with seasonal factors,” said Price Futures Group’s senior market analyst Phil Flynn.
Moreover, the US Energy Information Administration (EIA) has forecast global oil demand to grow in the remainder of 2023. The EIA has projected global oil demand to surpass global crude supply by around 100,000 b/d in 2023 and by around 200,000 b/d in 2024.
Downward pressure:
Brent felt some downward pressure after US crude inventories increased by around 3 million bbls in the week ended 7 July, Reuters reported citing the American Petroleum Institute (API) data.
“The API numbers released overnight were more bearish than expected,” said ING’s market analyst Warren Patterson. “The market had been expecting some small draws across crude and products,” he added in a note.
The more widely followed EIA inventory report will be released later today.
By Aparupa Mazumder
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