In July, investors had bet on the restriction of global supply and an increase in demand in the second half of the year.
On August 2, 2023, at 12:30 PM, futures prices for Brent, the benchmark for Angolan oil sales in October, were trading at $84.86 per barrel during the London market session, a decrease of 57 cents from the previous day. Meanwhile, West Texas Intermediate (WTI) dropped to $81.21 per barrel, down 59 cents from the previous day’s close.
“The oil prices may face technical adjustments, as the markets might have exceeded their purchases last month,” said CMC Markets analyst Tina Teng, quoted by the agency.
PVM analyst Tamas Varga observed that over the past few months, predictions of higher oil demand in the second half of 2023 compared to the first six months were released. This was associated with the reduction of global stocks due to supply cuts.
Concerns about a recession made investors more cautious at the beginning of the year, “but July arrived, and the situation changed abruptly,” noted Varga, pointing out that decisions by central banks left investors more confident that a “soft landing” is attainable, and a recession can be avoided in major economies.
Recent numbers from the United States, the world’s largest fuel consumer, show that fuel demand has reached its highest level since August 2019. A Reuters survey also estimated that US stocks should have decreased last week.
To boost the private sector, which is recovering from an extended period of COVID-19-related restrictions, the Chinese government, regulators, and the central bank pledged more financial support to small businesses.
Data released on Monday indicated that the manufacturing industry in the Eurozone contracted in July at the sharpest rate since May 2020, tempering enthusiasm. On the supply side, the meeting of the Organization of the Petroleum Exporting Countries and allies (OPEC+) this Friday is expected to lead to an extension of Saudi Arabia’s voluntary cuts until September, further restricting supply.
During a conference on Monday, BP’s CEO, Bernard Looney, predicted that oil demand growth will continue next year, with OPEC+ becoming increasingly coordinated. He stated, “This creates a situation that can be described as a prospect for higher oil prices in the coming months and years.”
