Oil settled higher July 27, with Brent crude topping $84/bbl for the first time since April, supported by supply tightness following OPEC+ production cuts and renewed bullishness on the outlook for Chinese demand and global growth.
Crude has posted four consecutive weekly gains on an expected tightening of supply because of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, as well as some involuntary outages.
Brent crude settled up $1.32, or 1.6%, to $84.35/bbl while U.S. West Texas Intermediate (WTI) crude settled up by $1.31, or 1.7%, to $80.09/bbl.
"We see the oil market undersupplied," UBS analysts said in a report. "We retain a positive outlook and look for Brent to rise to $85–$90 over the coming months."
Still, oil dropped on July 26 after data showed U.S. crude inventories fell less than expected and the U.S. Federal Reserve raised interest rates by a quarter of a percentage point, leaving the way open for another increase.
Risk appetite in wider financial markets is being boosted by growing expectations that central banks such as the Fed are nearing the end of policy tightening campaigns, which would boost the outlook for global growth and energy demand.
The U.S. economy grew by a bigger than expected 2.4% last quarter, government data showed Thursday, as labor market resilience supported consumer spending, while businesses boosted investment in equipment, potentially keeping a recession at bay.
"With interest rate hikes either at or near a peak amidst increasing views that a recession will be avoided, risk assets such as oil have become increasingly appealing," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
The European Central Bank raised interest rates for the ninth consecutive time on July 27.
A pledge on July 27 from China to boost policy support for the economy has spurred hopes of oil demand regeneration from the world's largest crude importer, Phillip Nova analyst Priyanka Sachdeva said in a note.
Coming into focus is an Aug. 4 meeting of OPEC+ ministers to review the market.
Recommended Reading
Diversified, Partners to Supply Electricity to Data Centers
2025-03-10 - Diversified Energy Co., FuelCell Energy Inc. and TESIAC will create an acquisition and development company focused on delivering reliable, cost efficient net-zero power from natural gas and captured coal mine methane.
Winter Storm Snarls Gulf Coast LNG Traffic, Boosts NatGas Use
2025-01-22 - A winter storm along the Gulf Coast had ERCOT under strain and ports waiting out freezing temperatures before reopening.
US Oil, Gas Rig Count Unchanged This Week
2025-03-14 - The oil and gas rig count was steady at 592 in the week to March 14. Baker Hughes said that puts the total rig count down 37, or about 6% below this time last year.
BKV Positions Itself to Meet Growing Power, CCS Demand
2025-02-26 - Electricity needs across the U.S. are expected to soar as industrial and manufacturing facilities, data centers and other consumers crave more power. BKV is exploring ways to bridge the gap between demand and energy supply.
Huddleston: Haynesville E&P Aethon Ready for LNG, AI and Even an IPO
2025-01-22 - Gordon Huddleston, president and partner of Aethon Energy, talks about well costs in the western Haynesville, prepping for LNG and AI power demand and the company’s readiness for an IPO— if the conditions are right.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.