Brent Oil Hovers Over $80 as Inflation Worries Ease

Natalie Grover
Wednesday, July 19, 2023

Global oil benchmark Brent hovered above $80 on Wednesday, buoyed by China's pledge to reinvigorate economic growth and expectations that the U.S. Federal Reserve will stop raising interest rates soon.

Brent futures rose 38 cents at $80.01 a barrel by 0956 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 was up 20 cents to $75.95 per barrel.

China's top economic planner pledged on Tuesday it would roll out policies to "restore and expand" consumption in the world's second-largest economy, which could boost oil demand.

In the U.S., a report on Tuesday showed retail sales rose by less than expected in June, boosting expectations the Federal Reserve will stop hiking rates after a widely expected 25 basis-point increase at its July 25-26 meeting.

Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand.

In another positive sign, European Central Bank (ECB) governing council member Klaas Knot on Tuesday suggested that rate hikes beyond next week's meeting were "by no means a certainty".

Meanwhile, the latest inflation data out of Canada and the United Kingdom that show signs of cooling have also lifted sentiment.

"Traders have started to become a lot more optimistic as inflation eases off...any improvement in the inflation data also means an improvement in oil demand," said Naeem Aslam, chief investment officer at Zaye Capital Markets.

On the supply side, data from the American Petroleum Institute (API), an industry group, showed crude oil, gasoline and distillate inventories all fell last week.

PVM analyst John Evans said one of the main reasons behind the market's benign opening was the API report, with the expectant crude draw of 2.3 million barrels turning into a mere 800,000 barrels.

"Those of us expecting some fireworks ... are sorely disappointed as it lands with a bit of a whisper rather than a bang," he said.

Meanwhile, Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.

(Reuters - Reporting by Natalie Grover in London; Additional reporting by Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Jamie Freed, David Holmes and Sharon Singleton)

Categories: Energy Industry News Activity Oil Price

Related Stories

Pertamina Joins Petronas in Ultra-Deepwater Asset off Indonesia

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

RINA Wins FEED Contract for Petronas’ Flagship CCS Project in Malaysia

Pakistan, Türkiye Deepen Oil and Gas Ties with Offshore Indus-C Block Deal

SBM Offshore, SLB to Optimize FPSO Performance Using AI

Timor Gap Boosts Stake in Finder Energy’s Timor-Leste Oil Fields

SBM Offshore Starts Construction of FSO for Trion Oil Field off Mexico

Russia Targets 2028 for Sakhalin-3 Gas Project Start Up

Hanwha Ocean's Tidal Action Drillship Starts Maiden Job with Petrobras

Brownfield Output Decline Accelerates, says IEA

Current News

Russia's Lukoil Takes Up Gunvor’s Offer for Foreign Assets

How Hot Is Your Cable? Understanding Subsea Cable Thermal Performance

Sponsored: UAE Breaks Ground on GW-Scale Renewable Energy Hybrid

Pertamina Joins Petronas in Ultra-Deepwater Asset off Indonesia

Malaysia’s Petronas and Oman’s OQEP Strengthen Oil and Gas Ties

Southeast Asia’s 2GW Cross-Border Offshore Wind Scheme Targets 2034 Buildout

Pharos Energy Kicks Off Drilling Campaign Offshore Vietnam

Viridien to Shed More Light on Malaysia’s Offshore Oil and Gas Potential

US Pressure on India Could Propel Russia's Shadow Oil Exports

Energy Drilling’s EDrill-2 Rig Starts Ops for PTTEP in Gulf of Thailand

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com