Bengaluru, 19 Aug, 2023 (GNP): Oil prices increased by around a dollar per barrel on Friday on clear signs of shrinking United States production. Despite that, both crude benchmarks looked ready to conclude their longest rally of 2023 on soaring apprehensions regarding the rise in global demands.
The US West Texas Intermediate (WTI) crude futures were up $1.08, or 1.3%, to $81.47 a barrel at 1708 GMT, while the global Brent crude benchmark jump up 81 cents, or 1%, to $84.93 a barrel.
However, both benchmarks boosted up on Friday after industry data revealed that the US oil and natural gas rig count, a prior indication of future production, dropped for a sixth week consecutively.
Meanwhile, a fall in US output could aggravate expected supply confinement through the remaining months of this year.
Moreover, those reservations, stoked by output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, assisted continuous surge in oil prices for seven weeks since June. Brent crude gained about 18% and WTI earned 20% throughout the seven weeks that came to an end on August 11.
Furthermore, oil prices are set to decline by 2% this week as an inflaming property crisis in China has risen stress about the country’s slow-moving economic recovery and decreased investors’ desire for risk all over the market.
The Senior Portfolio Manager at US Bank Asset Management Rob Haworth stated, “Concerns for investors remain focused on the tension between slowing global growth and still-tight global supplies.”
He further noted that demand is in doubt among investors concerned by the weak data from China, “Prices are likely to remain range bound for now.”
Concern is also growing over the US Federal Reserve’s continued interest rate increases to combat inflation. The elevated borrowing costs can obstruct economic growth and in turn, lessen overall oil demand.
CEO of Infrastructure Capital Management Jay Hatfield expressed, “Oil benchmarks were further depressed by seasonal demand weakness heading into the autumn.”