Despite anticipated weakening in the global economy and the possibility of further interest rate rises, oil prices dipped slightly on Friday but were still on track for a weekly gain due to rising Chinese demand and supply cutbacks from OPEC and other producers.
By 1:16 p.m. EDT (1316 GMT), Brent crude had increased by 48 cents to $76.15 per barrel. WTI crude for the United States gained 59 cents to reach $71.21.
Both Brent and WTI were expected to climb by 1.9% and 1.6%, respectively, during the course of the week.
This week, oil prices increased in anticipation of rising Chinese demand. China’s refinery throughput increased in May to its second-highest total ever, and the CEO of Kuwait Petroleum Corp. anticipates further growth in Chinese demand during the second half.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies’ voluntary production cutbacks, which were put into effect in May, as well as an additional reduction by Saudi Arabia in July, are other factors boosting the price of petroleum.
According to Russian official news outlets, Energy Minister Nikolai Shulginov said it “realistic” for oil prices to reach about $80 per barrel.
Shulginov also said that Russia expects its output of oil and gas condensate to decline by around 20 million tonnes (400,000 barrels per day) this year.
According to experts, shipping statistics, and a person with knowledge of the situation, Iran’s crude exports and oil production have increased to new highs in 2023 despite U.S. sanctions, boosting the world supply at a time when other suppliers are reducing output.
According to energy services company Baker Hughes Co., U.S. oil rigs decreased by four to 552 this week, their lowest level since April 2022, while gas rigs dropped by five to 130, their lowest level since March 2022.
The likelihood of increasing interest rates, which may impede economic development, put a ceiling on oil price increases.
Next week, the Bank of England is expected to increase interest rates by 0.25 percentage points. The U.S. Federal Reserve indicated at least a half-percentage point hike by year’s end, while the European Central Bank increased rates to a 22-year high on Thursday.
Investors have been keenly monitoring interest rates as well as Fed members’ comments.
According to Price Futures Group analyst Phil Flynn, we will be moving from Fed speaker to Fed speaker and data point to data point about oil prices.