ISLAMABAD
Oil prices edged lower on Monday amid a stronger dollar and uncertainty surrounding China’s economic growth.
As of 1150 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $0.25 (-0.30 percent) to reach $84.23 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went down by $0.10 (-0.13 percent) to $79.73 a barrel. Both Brent and WTI ended last week lower by 0.38 percent and 1.75 percent, respectively.
However, the price of Russian Sokol increased by $0.67 (+0.85 percent) to $79.36. Arab Light prices witnessed an increase of $0.91 (+1.03 percent) to reach $88.96 a barrel. On the other hand, the price for Opec Basket decreased by $0.13 (-0.15 percent) to $85.71. 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.
A recent batch of economic data from China, the world’s second largest oil consumer, has highlighted a rapid loss of economic momentum since the second quarter. China’s sputtering economy has whipsawed global financial markets in the past few months, with a property crisis spooking investors amid contagion fears. Supply cuts from Opec+ continue to support the market, but uncertainty over the global economic outlook – sluggish recovery in China, possible recession in the US and Europe – are weighing a little.
Federal Reserve Chairman Powell said on Friday the Fed would continue to bring inflation down to its 2 percent target. The US economy is not cooling as expected, with stronger-than-anticipated gross domestic product growth and “especially robust” consumer spending, he said. “We are prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down towards our objective.”
On the local front, persistent fall in the value of the rupee against the US dollar is likely to jack up petroleum products prices by over Rs20 per litre in the next fortnight review due on August 31. The exchange rate of the greenback has increased by Rs13.86 from August 16, 2023 to August 28. While only three working days left in the ongoing fortnight, a further increase in the dollar’s value remains on the cards. In the last two fortnights, the petrol price has already increased by Rs37.50 and diesel by Rs40 per litre.
