OPEC: In a positive turn of events, oil prices experienced an upward trajectory, bouncing back from previous losses. The driving forces behind this resurgence were the strategic supply cuts implemented by leading oil exporters, as well as the depreciation of the U.S. dollar.
As of the early hours on Tuesday, Brent crude futures demonstrated a climb of 0.4%, equivalent to 31 cents, settling at $78 per barrel by 0626 GMT. Simultaneously, U.S. West Texas Intermediate crude recorded an increase of 0.5%, or 35 cents, reaching $73.34.
The forthcoming supply cuts by major oil players, Saudi Arabia and Russia, scheduled to take effect in August, played a significant role in bolstering benchmark prices. Moreover, the decline of the U.S. dollar to a two-month low further amplified the positive momentum. A weaker dollar not only makes crude more affordable for holders of other currencies but also stimulates oil demand. Edward Moya, an analyst at OANDA, expressed confidence, stating, “Oil has found a floor, and the only potential disruptor would be scorching-hot U.S. inflation, leading to the Fed tightening the economy and triggering a recession.”
Additionally, China’s decision to provide increased support to its real estate sector as a means to enhance confidence had a notable impact on the surge in oil prices. Analyst Tina Teng from CMC Markets pointed out the positive influence of this move.
In the days ahead, market watchers will closely monitor data related to Chinese new yuan loans, trade balance figures, and U.S. inflation trends. Meanwhile, traders eagerly await the release of the American Petroleum Institute’s U.S. crude inventory data later today. Analysts have predicted a build of 200,000 barrels, which will likely provide further insights into market dynamics and influence future oil prices.
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