A look back

The past week presented some price stability for oil , hovering around $85/bbl. Despite the lack of price movement this is still considerably higher than the lows of $71 at the end of June. 

This increase of nearly 20% in price in such a small amount of time, relies heavily on the continued supply cut decisions made by oil producing nations. 

The Saudis have stated In early July, they would extend a cut of one million barrels a day in order to convince traders to squeeze the price of oil to circa the $100 a barrel mark. China has had a few  recent episodes of poor economic performance data which has nullified this move. Should we see a return to full capacity and the pick up in growth in the Far east , this could be the catalyst for a big move. 

Signs of tightening in the physical market also buoyed oil prices, with US crude inventories recording another large drawdown in the latest report, while output cuts from OPEC+ majors Saudi Arabia and Russia continue to be felt.

UK inflation data for July was recorded at at 6.4% versus a 7.9% reading in June. The small drop could provide some respite for business owners in the tail end of summer. 

A Look Ahead

Rumours of a slowdown of US output could have upside pressure on prices over the coming seven days, a balancing act vs a lull in global demand may see some volatility this week. As of Monday, oil was trading at $85.63 a barrel and WTI at $82.18. With many forecast suggesting average levels of $90/bbl pre 2024, a potential 6% price increase is a ominous possibility. 

Despite the halt on an aggressive run for Crude , uptrend since June remains intact, it seems that retail traders are starting to show early signs of becoming more bullish on the commodity. 

Tighter supply and expectations that the US Federal Reserve is close to ending its monetary tightening cycle, also aided the positive outlook.

The Opec+ countries, which pump almost 40% of the world’s crude, have a broader plan to limit supply into 2024 and prop up global oil prices.