London: Oil Prices Rise on Weak Dollar and Investor Risk Appetite

2023-07-18 12:04:54
London: Oil prices rose slightly on Tuesday, taking advantage of the weak dollar and the return of investors’ risk appetite, despite worrying Chinese demand. Around 10:45 GMT (12:45 CET), the barrel of Brent BRENT Brent or North Sea crude is a variation of crude oil serving as a benchmark in Europe, listed on the InterContinentalExchange (ICE), a stock exchange specializing in energy trading. It has become the first international standard for setting oil prices. of the North Sea for delivery in September took 0.34% to 78.77 dollars.

Its American equivalent, the barrel of West Texas Intermediate (WTI WTI West Texas Intermediate (WTI), also known as Texas Light Sweet, is a variation of crude oil that serves as a standard in pricing crude oil and as a commodity for oil futures contracts with the Nymex (New York Mercantile Exchange). ), the stock exchange specializing in energy.) for August delivery, gained 0.43% to $74.47.

The weakness of the dollar benefited oil, as the depreciation of the American currency encourages purchases of crude, denominated in greenback, making them more attractive for buyers using other currencies by increasing their purchasing power.

Investors are also evaluating the fundamentals of the market, which is expected to be undersupplied for the second half of the year, especially with production cuts from Russia and Saudi Arabia, two major crude producing countries.

However, crude’s gains remain capped by concerns over Chinese demand.

China’s growth in the second quarter of 2023 indeed fell to 0.8%, after rising 2.2% over the January-March period, according to figures released on Monday.

“The main fear is that signs of a slowdown in the economy in general are starting to have an impact on the demand for (fuel for) transport”, explains Stephen Innes, analyst at SPI AM.

China, the world’s largest crude importer, “is the main engine of growth in oil demand, accounting for 60% of the global increase (in demand) expected this year”, continues the analyst.

“Data from the customs authorities (from China) show that imports of crude oil reached 12.7 million barrels per day”, however tempers Carsten Fritsch, of Commerzbank, thus showing a still resilient demand for the moment, even if it is “likely that China imported more than its demand”.