ISLAMABAD: Crude oil prices edged lower on Friday after rising for three days in a row. As of 1330 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $0.34 (-0.38 percent) to reach $81.05 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $0.17 (-0.22 percent) to $76.72 a barrel. However, the price of Russian Sokol increased by $1.1 (+1.55 percent) to $71.96. Arab Light prices witnessed an increase of $1.06 (+1.28 percent) to reach $83.95 a barrel. Following suit, the price for Opec Basket increased by $0.90 (+1.12 percent) to $71.53. The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey. The US data on Wednesday showed consumer prices rose modestly in June, registering the smallest annual increase in more than two years. This is expected to decrease chances of another interest rate hike by the US Federal Reserve, which will decrease dollar’s demand, in which oil is traded. Oil prices have surged by an impressive 12 percent in just two weeks, fueled by significant supply cuts from Saudi Arabia and Russia. TLTP
These production reductions have effectively tightened the market, as evidenced by the rise in the premium of front-month Brent contracts to future contracts. This success in market support by OPEC has played a crucial role in shifting investor sentiment away from bearish sentiments. Furthermore, Saudi Arabia’s decision to extend its unilateral production cut has bolstered investor confidence and contributed to a more positive outlook.
Investor confidence in crude oil has been revitalized, leading to increased investments, particularly in petroleum futures and options contracts. This shift in sentiment has played a vital role in alleviating extreme pessimism that gripped the market at the end of June. The oil market is expected to maintain its tightness in the coming months.
