ISLAMABAD: Crude oil prices inched up on Tuesday amid expectation of rate hikes from US Federal Reserve and European central banks. As of 1215 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.01 (+0.01 percent) to reach $82.74 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.01 (+0.01 percent) to $78.80 a barrel. The price of Russian Sokol increased by $2.14 (+2.95 percent) to $74.56. Arab Light prices witnessed an increase of $2.54 (+3.01 percent) to reach $86.85 a barrel. TLTP
On the other hand, the price for Opec Basket decreased by $1.20 (+1.46 percent) to $83.19. 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.
Earlier during the intraday trading, both global benchmarks Brent and WTI edged lower. The dip comes ahead of central bank updates due in the United States and Europe, as traders calculate the chances for more rate hikes down the road.
Brent and WTI rose 1.5 percent and 2.2 percent respectively last week, their fourth straight week of gain, as supply is expected to tighten following OPEC cuts. Fighting also escalated last week in Ukraine after Russia withdrew from a UN-brokered safe sea corridor agreement for grains exports.
WTI closed at a three-month high on Friday last. The upswing was the result of expectations supply cuts by OPEC that would reduce inventories. US crude inventories, an indicator of fuel demand, fell by about 700,000 barrels to 457.4 million barrels in the week ending on July 14, according to the US Energy Information Administration. Petroleum stocks decreased by 1.1 million barrels last week, while distillate stocks rose slightly, the EIA data showed.
While the economic data from China and the US remain mixed, the fundamentals are increasingly pointing to a tighter oil market this summer. Russian crude oil exports have shown signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16. 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.
