Brent sheds some earlier gains

The front-month ICE Brent contract has shed $0.68/bbl on the day, to $75.37/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent drew some upward support after voluntary supply cuts pledged by OPEC+ oil-producing countries, including Saudi Arabia and Russia, came into force this month.

Saudi Arabia also announced that it would extend its voluntary output cut of 1 million b/d to August, along with Russia and Algeria, who are to reduce oil output and export levels for August by an additional 500,000 b/d and 20,000 b/d, respectively.

OPEC’s de facto leader Saudi Arabia's announcement signifies an extension of the previously announced output reduction pledge. However, Russia’s announcement suggests a new reduction in exports.

"As part of the effort to ensure the oil market remains balanced, in August, Russia will voluntarily reduce its oil supply by 500,000 barrels per day, by cutting its exports to global markets by that amount," Russian deputy prime minister Alexander Novak said in a statement yesterday.

Downward pressure:

Fears of further interest rate hikes by major central banks have kept a lid on Brent prices in recent days.

"Despite the announcements of two fresh rounds of cuts from OPEC+/Saudi Arabia, crude prices have largely remained below $80/bbl as the market has been driven less by fundamentals and more by macroeconomic concerns," analysts at HSBC said in a note.

The crude demand outlook has too much “doom and gloom” priced in as the US and China outlooks should remain upbeat, OANDA’s market analyst Ed Moya said.

“China might be buying cheaper discounted Russian crude, but soon they will require more and those purchases could broaden as they slowly deliver more economic stimulus,” he said.

By Aparupa Mazumder 

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