September West Texas Intermediate crude oil prices posted 5 consecutive weekly gains as we concluded last week’s trading.
Gains were credited to tighter supply control by Saudi Arabia and Russia.
This recent display of uptrend followthrough comes despite fears over slowing economic growth and reduced energy demands due to potential central bank interest rate hikes.
Saudi Arabia and Russia, two significant oil suppliers, have made moves to maintain a tight supply through the balance of the summer travel season and possibly beyond that if needed.
The Saudi Kingdom has extended a voluntary oil output cut of one million barrels per day for a third month till September, with the possibility of further extensions or even deeper cuts.
Meanwhile, Russia announced a reduction in oil exports by 300,000 bpd in September.
This cut builds on previous strategies by the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia (better known as OPEC+), who decided in June to limit oil supply till 2024.
While the demand for oil remains mixed due to economic conditions varying globally.
In the U.S., inflation remains a primary concern, potentially slowing growth and oil demand.
Despite this, the labor market remains tight, signifying possible resilience in economic activity.
In China, the world’s second-largest oil consumer, economic momentum seems to be faltering, which could impact oil consumption.
In Europe, the slump in business activity, particularly in the dominant services industry, may also depress demand.
However, it’s notable that global demand still outpaces supply, driving crude oil inventories down in several regions.
Energy market fundamentals are leaning towards bullish sentiment. Wednesday’s 2% drop in oil prices reflects the broader financial market volatility as traders digested the second United States credit rating drop with Bozo Biden residing in the White House on both occasions.
On the same day the inventory report surprised traders with a 17-million-barrel decline in U.S. crude inventories – the largest drop dating back to 1982.
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