Singapore, July 4 (BNA): Oil prices rose on Tuesday as supply cuts for the month of August by major exporters Saudi Arabia and Russia weighed on markets against the backdrop of an uncertain global economic outlook.
Brent crude futures rose 34 cents, or 0.46 percent, to $74.99 a barrel by 0618 GMT. The price of US West Texas Intermediate crude was at $70.12 a barrel, up 33 cents, or 0.47%, Reuters reported.
“Fundamentals do not have as much influence on price direction as one would expect. Instead, the uncertain macro outlook is what the market is focusing on,” ING analysts said in a note to clients.
“It is difficult to see this pattern changing significantly in the short term, although the additional cuts are putting a stronger floor for Brent crude at around $70 a barrel,” ING analysts added.
US markets will be closed on Tuesday due to the Independence Day holiday. Oil benchmarks held about 1% lower in the previous session.
Saudi Arabia said on Monday that it will extend its voluntary cut of 1 million barrels per day (bpd) of production until August, the Saudi Press Agency reported. Russian Deputy Prime Minister Alexander Novak said Russia would also cut its oil exports by 500,000 barrels per day in August.
The cuts amount to 1.5 percent of global supplies and raise the total pledges of OPEC + oil producers to 5.16 million barrels per day, as Riyadh and Moscow look to support prices. OPEC+ includes members of the Organization of the Petroleum Exporting Countries and allies.
US crude inventories were expected to drop by about 1.8 million barrels in the week ending June 30, the third straight week of declines. Industry data on inventories will be published on Wednesday and official data on Thursday, both of which were delayed by a day due to the US holiday.
On the macro front, analysts’ outlook was mixed after business surveys showed a decline in global factory activity due to slowing demand in China and in Europe. US manufacturing also fell in June – reaching levels last seen in the initial wave of the COVID-19 pandemic. .
Although GDP gains have eased in recent weeks due to a second-quarter rating downgrade in China and the European region, neither the US nor global economies face an imminent risk of falling into recession, amid a strong services sector, a slump in the US commodities sector and a slump, JPMorgan analysts said. On a note The broad easing of global financial conditions.
However, weak demand for economic growth still indicates that demand for goods remains weak, which will affect distillate consumption, ANZ analysts said in a note to clients.
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