News

Oil Futures Continue to Rise near Three-Month Highs

4.7

Charles M. Hall

July 30, 2023

Oil futures continued their upward trajectory on Thursday, rebounding from losses in the previous session and trading near three-month highs. Investors are closely monitoring global supplies of crude for signs of further tightening.

Price Action

West Texas Intermediate crude for September delivery rose by 67 cents, or 0.8%, to $79.45 a barrel on the New York Mercantile Exchange.
September Brent crude, the global benchmark, increased by 51 cents, or 0.6%, to $83.43 a barrel on ICE Futures Europe. The October Brent contract, which is the most actively traded, saw a rise of 49 cents, or 0.6%, reaching $83.05 a barrel.
Back on Nymex, August gasoline rose by 0.3% to $2.915 a gallon, while August heating oil gained 0.3% at $2.851 a gallon.
August natural gas declined by 2.2% to $2.606 per million British thermal units.

Market Drivers

Oil prices retreated slightly from their recent highs during Wednesday's session. This was mainly attributed to the release of weekly government data, which showed smaller-than-expected declines in inventories of crude, gasoline, and distillates.

Crude Oil Prices Set to Surge as Supplies Tighten

The price of crude oil is on the rise once again, with analysts predicting that it could reach $90 a barrel. This increase is believed to be driven by a combination of factors, including OPEC+'s voluntary production cuts and recent unplanned outages during the summer months. These developments have led experts at UBS to project a market deficit of 700,000 barrels a day in June, and as high as 2 million barrels a day in July and August.

According to UBS strategists, the tightening of oil markets will become even more apparent as these deficits start to impact on-land oil inventories. Furthermore, the size of the market deficit in September will depend on whether Saudi Arabia's additional voluntary production cut of 1 million barrels a day is extended beyond July and August.

With tight supplies and growing optimism about the global economy, experts believe that crude oil prices will continue to rise in the coming months. This presents both opportunities and challenges for investors, particularly those involved in the stock market.

In conclusion, the future looks promising for crude oil prices as various factors align to create a market deficit and push prices higher.