August 21, 2023 (MLN): Oil prices rose on Monday as global supply continues to tighten with lower exports from Saudi Arabia and Russia.
Brent crude is currently trading at $85.35 per barrel, up by 0.65% on the day.
While West Texas Intermediate crude (WTI) is trading at $81.2 per barrel, up by 0.67% on the day.
To note, both benchmark prices fell around 2% last week, snapping a 7-week winning streak last week after the U.S. dollar strengthened following the release of FOMC minutes hinting at the possibility that interest rates could remain higher for longer, coupled with China's worsening economy which is facing new threats from a deteriorating housing market and low consumer spending.
Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, citing preliminary data from shiptracking firm Kpler stated that the supply is tightening, however, with OPEC+ crude exports set to fall a second month in August, as Reuters reported.
"Overall supply is going down, demand is going up," Grasso said. "Unless there is a recession and demand slows or drops, OPEC+ is in control."
The world's top crude importer is drawing on record inventories amassed earlier this year as Chinese refiners scale back purchases after supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, drove global prices above $80 a barrel.
In July, Saudi Arabia's shipments to China fell 31% from June while Russia, with its discounted crude, remained the Asian giant's largest supplier, Chinese customs data showed.
Meanwhile, Chinese refiners ramped up refined product exports in July, drawn by strong export margins.
In the United States, the number of operating oil rigs, an early indicator of future output, fell by five to 520 last week, their lowest since March 2022, according to Baker Hughes' report on Friday.
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Posted on:2023-08-21T11:17:16+05:00
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