Key points
- WTI Crude with sizable gains
- OPEC+ supply cuts, weaker US Dollar support market
- H2 demand prospects also favor oil prices
Futures on US West Texas Intermediate Crude Oil edged higher on Tuesday, supported by a weaker US Dollar, supply cuts by top oil exporters and prospects of stronger demand in developing nations during the second half of the year.
The US Dollar Index registered a two-month trough, underpinning dollar-priced Oil.
Also supporting the market, Saudi Arabia, OPEC+ largest producer, said last week it would extend its voluntary production cut of 1 million barrels per day to August.
Additionally, Russia and Algeria volunteered to reduce their output and export levels for the same month.
“Oil has found a floor and the only thing … that could break that is if U.S. inflation is scorching hot and the Fed is forced to tighten this economy into a recession,” OANDA analyst Edward Moya was quoted as saying by Reuters.
Market players are waiting to see whether inflationary pressures will continue moderating, while providing clues over the Federal Reserve’s rate trajectory.
Meanwhile, the head of the International Energy Agency said yesterday that oil demand from China and developing nations, coupled with OPEC+ output cuts, would likely keep the market tight during the second half of 2023.
“Even in sluggish economic growth, China and other developing countries’ demand is strong,” IEA’s Fatih Birol said.
“Taken together with the production cuts coming from key producing countries, we still believe that we may see tightness in the market in the second half of this year.”
As of 12:02 GMT on Tuesday WTI Crude Oil Futures for August delivery were gaining 0.64% to trade at $73.46 per barrel.
At the same time, Brent Oil Futures for September delivery were gaining 0.58% on the day to trade at $78.14 per barrel.
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