WTI nears $76 on supply cuts, lower US inflation
ISLAMABAD, ((Ind:Report): Crude oil prices continued to rise for a third session in a row on Thursday, fueled by planned supply cuts from major oil producers and lower-than-expected inflation data from the United States.
As of 1200 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.31 (+0.39 percent) to reach $80.42 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.23 (+0.3 percent) to $75.98 a barrel.
Similarly, the price of Russian Sokol increased by $0.66 (+0.94 percent) to $70.86. Arab Light prices witnessed an increase of $0.51 (+0.62 percent) to reach $82.89 a barrel. Following suit, the price for Opec Basket increased by $0.58 (+0.73 percent) to $79.67. The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
Russia’s flagship crude grade Urals, which has been trading consistently below the price cap set by the G7 and the European Union, climbed above $60 per barrel on Wednesday. It is now, for the first time, that observers can judge if the price cap is actually working. Before, with Urals trading below it anyway, it could hardly be argued that the cap was doing anything to deliberately squeeze Russia’s oil export income.
In fact, because another Russian grade, ESPO, has been consistently trading above the price cap, it could be argued that the cap was not the most effective of tools, mostly creating a headache for Western insurers and shipowners. But now that Urals has jumped above the cap, even temporarily, things could get interesting and unpleasant for buyers.
On the other hand, the US data on Wednesday showed consumer prices rose modestly in June, registering the smallest annual increase in more than two years. This is expected to decrease chances of another interest rate hike by the US Federal Reserve, which will decrease dollar’s demand, in which oil is traded.
Similarly, another factor pushing oil prices higher is top producer Saudi Arabia’s pledge last week wherein it announced to extend a production cut of one million bpd in August, while Russia will cut exports by 500,000 bpd. TLTP
Comments are closed.