Harvest Global Markets :

Tuesday saw little change in oil prices, which were still close to the three-month high achieved on Monday. As manufacturers continued to execute output restrictions, signs of tightening global supply had an impact on the market. The world’s greatest consumer of petroleum, the United States, also significantly contributed to the prices being supported by strong demand. West Texas Intermediate crude for sale in the United States traded at $81.64 per barrel, down 0.2% or 16 cents from the session’s closing price, which was the highest since April 14.

However, given the prospect that the market was overbought in the previous month, there is a chance that oil prices will correct. Even so, there are still supportive elements in action. Crude futures are likely to be supported by a weaker US dollar and China’s policy confidence. Demand may rise as a result of the cheaper price of oil priced in dollars for holders of other currencies. Additionally, the prognosis for oil demand has been favorably impacted by indications of a soft landing in the American economy. Additional policy directives have been made public by the Chinese government in an effort to increase domestic consumption and the economy of the nation, particularly in light of the fact that manufacturing activity declined in July for the fourth consecutive month.

The organization of the Petroleum Exporting Countries (OPEC) and its allies, also referred to as OPEC+, will hold their ministerial meeting this Friday, and anticipation is growing. Oil prices might hit record highs in 2023, according to National Australia Bank (NAB) analysts, who anticipate that Saudi Arabia’s production curbs will likely be prolonged for one additional month.Saudi Arabia went even further by committing to a second voluntary cut of 1 million barrels per day for July. In June, OPEC+ agreed to limit oil output until 2024. According to the data, Saudi Arabia’s production decreased by 860,000 bpd in July, while OPEC production as a whole decreased by 840,000 bpd, falling just shy of the target.

Thus, according to U.S. data issued on Monday, fuel consumption increased to 20.78 million bpd in May, the highest level since August 2019. The Energy Information Administration reported that the demand for gasoline increased as well, reaching a record high of 9.11 million bpd for the first time since June 2022. According to a Reuters poll, which predicted that crude inventories dropped by approximately 900,000 barrels in the week to July 28,  U.S. crude oil and gasoline stockpiles should have decreased last week.

In conclusion, oil prices continued to rise, mostly as a result of tighter worldwide supply and strong demand in the United States and China. Market analysts are enthusiastic about the possible effect of the OPEC+ meeting on prices, even though some caution is urged owing to the possibility of a correction.