London, July 5 (BNA): Brent crude, the benchmark, fell today, Wednesday, amid fears of a global economic slowdown that overshadowed supply cuts announced by Saudi Arabia and Russia this week.
According to Reuters, Brent crude fell 18 cents, or 0.24 percent, to $76.07 a barrel by 1003 GMT, after rising $1.60 on Tuesday.
US West Texas Intermediate crude was trading at $70.23, up $1.44, or 2.06%, from Monday’s close.
With no settlement on Tuesday due to the Independence Day holiday, Wednesday’s trade appeared to narrow the spread between the two benchmarks, with WTI catching up to Brent’s gains the day before.
“These measures are designed to push oil prices up, but they are currently deteriorating due to macroeconomic concerns,” said Tamas Varga, an analyst at BVM, about the impact of supply cuts on prices.
“Some might argue that the recent decision to supply the market with less oil is actually a bearish one because it can be seen as an acknowledgment that demand is struggling to grow at a healthy rate due to headwinds from the global economy.”
Recent surveys have shown a decline in global factory activity, reflecting slowing demand in China and Europe.
Services activity in China expanded in June at the slowest pace in five months while business activity in the eurozone slipped into contraction territory last month amid a broad contraction across the bloc’s dominant services sector.
Saudi Arabia, the world’s largest oil exporter, said on Monday it would extend its voluntary production cut of 1 million barrels per day until August. Meanwhile, Russia and Algeria cut their production and export levels in August by 500,000 bpd and 20,000 bpd, respectively.
Morgan Stanley on Wednesday cut its oil price forecast, forecasting a market surplus in the first half of 2024 as non-OPEC supply grows faster than demand next year.
Market attention is also focused on interest rates, as US and European central banks are expected to raise interest rates further to tackle stubbornly high inflation.
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