2023-07-24 10:48:05
Oil prices were still rising on Monday, with the US benchmark even hitting a high since late April, although the momentum in the black gold market waned ahead of the US Federal Reserve (Fed) meeting with significant implications for the global economy.
Around 10:35 a.m. GMT (12:35 p.m. in Paris), a barrel of Brent from the North Sea, for delivery in September, took 0.81% to 81.73 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery the same month gained 0.86% to 77.73 dollars following rising to 77.84 dollars, a three-month high.
Galvanized since the end of June by announcements of voluntary cuts in supply from two of the three largest world producers, Saudi Arabia and Russia, crude prices recorded a fourth consecutive week of increases last week.
Bad news on China’s GDP last week only temporarily weighed on prices as “investors are focused on the economic support measures that Beijing might deploy”, comments Ricardo Evangelista, analyst at ActivTrades.
The weakness of the Chinese economy, whose recovery has been disappointing following the long confinements linked to Covid-19, explains why oil prices have remained down since the start of the year despite the rebound in recent weeks.
“China’s economic slowdown, particularly as it affects the particularly oil-intensive industrial sector, likely means China’s demand for crude will be lower,” said CBA analyst Vivek Dhar.
But oil market players are turning away from China or Saudi Arabia on Monday morning to focus on the Fed, and to a lesser extent on the European Central Bank (ECB), which will publish their monetary policy decisions on Wednesday and Thursday respectively.
“Rate hikes are expected from both the ECB and the Fed, but they might also signal that the end of their rate hike cycle is approaching,” Evangelista said.
“In this case, optimism regarding the economy should increase and lead to an upward revision of the outlook for oil demand, which should increase oil prices,” he adds.
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