Oil rose to around $80 a barrel in London as traders weighed signs of tightening in the global market against a shaky economic backdrop.
(Bloomberg) — Oil rose to around $80 a barrel in London as traders weighed signs of tightening in the global market against a shaky economic backdrop.
Brent futures added 0.7% in thin trading volumes on Wednesday. They advanced the previous session as data showed that Russia’s crude shipments fell to a six-month low in the four weeks to July 16. The curbs suggest Moscow is fulfilling a pledge with its partners in the OPEC+ coalition to rein in supplies. Meanwhile China, the biggest oil importer, vowed to bolster its private sector.
Oil has been buffeted in recent months as investors weigh China’s stuttering recovery against supply cuts by OPEC+ heavyweights Saudi Arabia and Russia, and indications that the Federal Reserve may be close to concluding a cycle of interest-rate hikes. Prices have made a decisive break higher since late June on signs the market may finally be tightening, but are still lower for the year.
“It looks like the price weakness is behind us, and traders seem to recognize that the market will tighten significantly from this month due to supply cuts and improving demand,” said Carsten Fritsch, a commodity analyst at Commerzbank AG in Frankfurt. “But the prospect for recessions in the US and the euro zone, combined with slower demand in China, will provide headwinds.”
Russia said it aims to reduce its third-quarter crude export plans by 2.1 million tons, in line with its previously stated pledge to cut overseas shipments by 500,000 barrels a day in August.
There are also signs of tightening in the US, the world’s biggest fuel consumer.
The American Petroleum Institute said that nationwide crude inventories fell by 797,000 barrels last week, according to a person familiar with the data. The API is funded by the oil industry.
Stockpiles at the storage hub in Cushing, Oklahoma, dropped by 3 million barrels last week. That would be the largest decline since October 2021 if confirmed by official Energy Information Administration data due Wednesday.
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–With assistance from Elizabeth Low and Sharon Cho.
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