ISLAMABAD
Crude oil prices surged around one percent on Monday as traders refocused their attention on signs of supply tightness.
As of 1320 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.62 (+0.73 percent) to reach $85.61 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.88 (+1.28 percent) to $81.61 a barrel. The price of Russian Sokol rose by $0.38 (+0.51 percent) to $75.59. Arab Light prices witnessed an increase of $0.57 (+0.65 percent) to reach $87.85 a barrel. On the other hand, the price for Opec Basket inched up by $0.06 (+0.07 percent) to $84.88. 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.
Oil futures logged their fifth weekly gain in a row last week, powered by supply concerns in the coming months. Both major global benchmarks Brent and West Texas Intermediate (WTI) ended the week higher by 4.84 percent and 4.55 percent, respectively.
Crude has posted five consecutive weekly gains on an expected tightening of supply because of output cuts by the Organization of the Petroleum Exporting Countries and its allies known as OPEC+, as well as some involuntary outages. Renewed bullishness on the outlook for Chinese demand and global growth also supported the fresh rise in prices. A pledge last week from China to boost policy support for the economy has spurred hopes of oil demand regeneration from the world’s largest crude importer. Also, coming into focus is an August 4 meeting of OPEC+ ministers to review the oil market.
The fundamentals are increasingly pointing to a tighter oil market this summer. Russia is preparing to cut 500,000 barrels per day (bpd) off its oil exports in August, and shipping plans so far suggest that Russia could deliver on at least part of its pledge to reduce oil exports next month.
Saudi Arabia’s crude oil exports have also started to decline, to below 7 million bpd in May, for the first time in many months. Crude shipments out of the world’s top exporter could further decline as Saudi Arabia is now cutting its production by 1 million bpd in July and August. TLTP
