The oil is experimenting its third consecutive week of increasesdriven by reduced supply due to production cuts led by Saudi ArabiaThere is optimism about the economic recovery in China.
Saudi Arabia and Russiaas key partners in the OPEC+have expanded combined production cuts in 1.3 million barrels per day (bpd) until the end of the year, thus accelerating the reduction of global crude oil inventories.
This concern about supply has led to reference prices Brent and West Texas Intermediate (WTI) to reach their highest levels since November.
The futures of Brent crude oil are experiencing an increase of 37 cents, reaching 94.07 dollars per barrel, while the WTI registers an increase of 42 cents, reaching $90.58. Both benchmarks have accumulated around a 4% of profits in the week.
Oil: the hope for Chinese recovery
China, being the world’s largest oil importer, is considered crucial for the growth of crude oil demand in the remainder of the year. Despite initial concern about the slow recovery of its economy after the pandemic, the figures for Industrial production and retail sales have shown growth in August at a higher rate than expected.
Friday’s data also revealed increased processing at oil refineries compared to a year earlier, as processors maintained high run rates to meet strong global demand for petroleum products.
Additionally, the financing cost outlook is also improving. Although headline inflation in the United States rose in August, the underlying figure has moderated, suggesting the possibility of a pause in interest rate hikes by the Federal Reserve next week. However, the US central bank is likely to leave open the possibility of a final hike in November.
At the international level, the European Central Bank It applied its tenth consecutive rate hike this week, but hinted that it would probably stop there.
In this context, Edward Moya, OANDA analyst, stated: “No one doubts that OPEC’s decision late last month will keep the oil market very tight in the fourth quarter“. The outlook continues to show a combination of factors that support an upward trend in the oil market in the coming weeks.
Source: Ambito
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