Oil prices see moderate gains amid mixed economic signals, OPEC+ production cuts
(MENAFN) Oil prices experienced a rise in early trading on Monday, driven by expectations of a supply deficit attributed to peak fuel consumption during the summer and the OPEC+ production cuts scheduled for the third quarter. Despite these upward pressures, adverse economic trends and increased production from non-OPEC+ producers tempered the gains. Specifically, brent crude futures increased by 16 cents, or 0.2 percent, reaching USD85.16 per barrel by 0032 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 17 cents, or 0.2 percent, to USD81.71 per barrel. Over the month of June, both crude oil prices saw approximately a six percent rise, with Brent crude surpassing USD85 per barrel in the last two weeks of the month. This rise follows the significant extension of most OPEC production cuts, including those by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, until 2025.
Analysts anticipate a supply deficit in the third quarter as the high demand for transportation and air conditioning during the summer months is expected to deplete fuel stocks. Additionally, expectations of a potential Federal Reserve interest rate cut and escalating geopolitical concerns in Europe and between Israel and Lebanon’s Hezbollah have helped sustain oil prices. According to IG analyst Tony Sycamore, the recent increase in U.S. WTI crude could extend toward USD85 per barrel if prices maintain above the 200-day moving average, which is currently at USD79.52. In the United States, both oil production and demand reached their highest levels in four months in April, as detailed in the monthly oil supply report released by the Energy Information Administration on Friday.
Conversely, in China, recent manufacturing data has not been promising for oil demand in the world’s second-largest consumer and largest importer of crude. A survey published on Sunday indicated that manufacturing activity in China decreased for the second consecutive month in June, while services activity dropped to a five-month low. These findings have reinforced calls for additional government stimulus measures as China’s economy struggles to regain momentum.
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