Oil resumes rally as equities gain and US inventories decline
Oil advanced, tracking gains in wider equity markets, after US crude inventories declined and the Federal Reserve indicated that any more rate hikes would be data-dependent.
West Texas Intermediate traded above $79 a barrel, rising for the fifth time in six sessions. There’s growing speculation the Fed is nearing the end of its monetary tightening cycle, after it raised interest rates on Wednesday for the 11th time since March 2022.
The dollar also weakened, with a Bloomberg gauge of the greenback on its third day of declines, making commodities cheaper for most international buyers.
Oil has broadly rallied since late June, aided by supply cuts from the Organisation of Petroleum Exporting Countries and its allies, and signs that Russian seaborne crude exports are falling.
“From a fundamental perspective the recent price uptick has been driven primarily by OPEC+’s voluntary production cuts,” UBS analysts including Giovanni Staunovo wrote in a note. “In the months ahead oil markets should tighten further.”
Saudi Arabia is expected to extend its 1 million barrel a day oil supply cut into September as it seeks to foster a tentative recovery in prices, according to a Bloomberg survey. With Russia also curbing output, banks including Standard Chartered Plc anticipate a deepening shortfall in the coming months.
Meanwhile, US crude stockpiles fell by 600 000 barrels last week, and inventories at the storage hub in Cushing, Oklahoma, dropped to the lowest since May, data from the nation’s Energy Information Administration showed.
Gasoline markets are also flashing bullish signals, with prices of the vehicle fuel surging globally in a sign of increasing demand. Futures soared to a nine-month high in New York, sending shock waves through to the pump, while prices have also been rising in Asia.
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Source: moneyweb.co.za
