Crude oil prices maintain robust momentum amidst global influences
Following an impressive surge of approximately 15-16 percent in July, the first week of August has further seen a 1.5 percent increase. This signifies a robust trend in crude oil prices.
Crude oil is currently priced at $86 per barrel and has observed an uninterrupted upward trajectory for six consecutive weeks. It is also trading at its highest point in the past four months. Following an impressive surge of approximately 15-16 percent in July, the first week of August has further seen a 1.5 percent increase.
This signifies a robust trend in crude oil prices. The commendation for this upward movement primarily goes to the producers, specifically Saudi Arabia and Russia, as their persistent efforts to curtail output have significantly contributed to this situation.
Saudi Arabia has announced its intention to reduce output by 1 million barrels per day in September, while Russia plans to cut 30,000 barrels per day. They have indicated that this reduction could be intensified in the upcoming months of September and October, with the possibility of an extension. Despite implementing output cuts, their communication has conveyed a notably optimistic tone.
In the meantime, Saudi Aramco has increased its official selling price for Asia for the third consecutive month, effective from September. This indicates that despite the higher fuel prices, there has been an improvement in demand. Therefore, the strategy employed by OPEC and its allies involves a focus on market share, elevated prices, and output reduction.
Additionally, a decline in production and inventories is evident in the US. Last week, US inventories witnessed a notable decrease of 17 million barrels, marking a record-high reduction. Moreover, attention is directed toward the US production itself, which has sustained a decline for the second consecutive month.
The dwindling trend is further evident in the continuous reduction of US operating rigs, with the current count at 525, the lowest since March 2022. This decrease suggests a weakened production scenario.
In the upcoming week, market participants will closely monitor the US consumer price index, which serves as an essential indicator. The week's schedule also includes significant events such as China's trade data, China's inflation data on Thursday, and the US inflation and producer inflation figures on Friday. This packed schedule ensures that each day will bring about movements in currency markets, while commodities will draw cues from these events.
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(Edited by : C H Unnikrishnan)
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