Prices of oil increased on Monday as worldwide supply tightened with decreased exports from Saudi Arabia and Russia, offsetting nagging worries regarding worldwide demand growth in the midst of high interest rates.
Brent crude rose 75 cents to $85.55 per barrel by 03:01 GMT, while U.S. West Texas Intermediate crude was at $82.05 per barrel, up 80 cents. The September WTI contract ends on Tuesday, and the more active October contract rose to $81.39, i.e., 73 cents a barrel.
Last week, both front-month benchmark prices ended a 7-week winning streak to publish a weekly loss of about 2% as the US dollar increased on expectations that interest rates would rise for an extended period of time. Additionally, concerns about China’s slow economic growth and oil demand increased as a result of the country’s worsening real estate problems.
However, supply is tightening, with OPEC+ crude exports set to fall for a second month in August, according to Stefano Grasso, a senior portfolio manager at 8VantEdgde in Singapore, mentioning preliminary data from shiptracking company Kpler.
“Overall supply is going down, demand is going up,” Grasso said. “Unless there is a recession and demand slows or drops, OPEC+ is in control.”
The world’s biggest crude importer is drawing on record inventories gathered earlier this year as Chinese refiners scale back purchases after supply cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, referred to as OPEC+, pushed global prices above $80 a barrel.
Chinese customs data show that while Russia, with its discounted crude, continued to be China’s main supplier, Saudi Arabia’s shipment to the Asian giant decreased 31% from June to July.
Meanwhile, Chinese refiners ramped up refined product exports in July, attracted by robust export margins.
According to a report released by Baker Hughes on Friday, the count of operating oil rigs in the United States, a leading indicator of future output, dropped by five to 520 last week, the lowest level since March 2022.
