ISLAMABAD: Rising oil prices took a breather on Tuesday after surging for five consecutive sessions amid a stronger US dollar and reports that global business activity largely slowed last month. As of 1255 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $0.45 (-0.51 percent) to reach $88.55 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $0.02 (-0.03 percent) to $85.53 a barrel. Both contracts are at their highest in more than half a year. However, the price of Russian Sokol increased by $0.18 (+0.22 percent) to $82.85. Arab Light prices witnessed an increase of $0.15 (+0.16 percent) to reach $92.56 a barrel. On the other hand, the price for Opec Basket increased by $1.62 (+1.81 percent) to $91.27. 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 Dollar is heading higher after a very lacklustre Monday where US markets were closed for Labour Day. The Greenback is soaring on the back of weak Chinese data and several Purchase Manager Index (PMI) numbers out of Europe that are pointing to a full blown contraction in the bloc. The US dollar hit a more than three-month high, making oil more expensive for holders of other currencies and denting demand. TLTP
Oil took a step back after reports showed that global business activity largely slowed last month as services firms struggled in the face of weak demand due to rising prices and borrowing costs making indebted consumers rein in spending.
Meanwhile, traders have turned their attention from economic indicators to OPEC+ supply policy. The OPEC+ is meeting this week to discuss its next moves and analysts expect the production cuts to remain unchanged and get extended for another month as the group seeks sustained higher prices. Russia has already said it would extend its export cuts for another month, which also contributed to this week’s price gains and now traders anticipate an identical move by Saudi Arabia with regard to its production.
