- Oil heads for a monthly gain despite a fourth straight quarterly loss
- August ’23 WTI gained 80c this morning to trade around $70.64/Bbl
- Crude found support this week following a substantial U.S. inventory drop of 9.6 MMBbl, much higher than Bloomberg's 1.2 MMBbl forecast
- High inflation, interest rate hikes, and a relatively slow recovery in Chinese manufacturing and consumption have weighed on prices in recent months
- However, Saudi Arabia's additional 1 MMBbl/d output cut in July, in addition to OPEC+’s production cut agreement through 2024, supports prices
- Saudi Arabia Under Pressure to Sustain Output Cut Amid Weak Prices (Bloomberg)
- Saudi Arabia’s additional voluntary 1 MMBbl/d production cut is set to come into effect on July 1
- Despite the cut averting deeper price drops, crude prices have continued to trade sideways
- Energy Minister Prince Abdulaziz bin Salman said he’d keep the market “in suspense” on whether the measure would remain in place in August and beyond
- Some analysts expect that an extension for at least one more month would be prudent amid moderate demand recovery and a weaker economic outlook
- FGE consultants expect Saudi Arabia to continue its oil cuts into August, potentially lowering exports to 6 MMBbl/d from April 7.52 MMBbl/d
- ECB Faces Challenge as Euro-Area Core Inflation Surges (Bloomberg)
- Euro area’s core inflation which excludes volatile items like food and fuel, surged to 5.4% in June, hindering ECB's plans for interest rate hikes
- Persistent high inflation may push ECB to continue raising rates while grappling with balancing the risks of prolonged inflation and achieving its 2% target