Oil extends gains over cautious trading, lower US crude stocks; Brent near $80/bbl

  • Crude oil import of Asia’s major crude oil consumers, India and China, recorded an all-time high in the month of June. India's crude oil imports from Russia was nearly 2 million barrels per day, while China’s imports from Russia were 2.56 million bpd in the same period.

Edited By Nikita Prasad
First Published20 Jul 2023, 09:54 PM IST
FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. REUTERS/Alexander Manzyuk/File Photo(REUTERS)

Oil prices edged higher on July 20 on lower US crude inventories and firm buying from China, but a weaker demand outlook kept investors cautious. China's economic recovery following its end to COVID-19 curbs has fallen short of expectations. The country's oil imports year-on-year surged by nearly half in June, but at the same time stock levels rose to near an all-time high. 

In fact, crude oil import of Asia’s major crude oil consumers, India and China, recorded an all-time high in the month of June. India's crude oil imports from Russia was nearly 2 million barrels per day in June, while China’s imports from Russia were 2.56 million bpd in the same period, noted Religare Broking in its commodity insights research report.

September Brent futures climbed 29 cents, or 0.4 per cent, to $79.75 a barrel while August U.S. West Texas Intermediate (WTI) crude gained 25 cents, or 0.3 per cent, to $75.60 a barrel. The August WTI contract expires on Thursday. The more active September WTI crude was 35 cents, or 0.5 per cent, higher at $75.64. 

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a August 21 expiry, were last trading lower by 0.05 per cent at 6,203 per bbl, having swung between 6,126 and 6,254  per bbl during the session so far, compared to their previous close of 6,206 per bbl.

Brent crude prices have broken through to a higher range this month, after being stuck at $72-$78 in May and June, according to Citi analysts, after Saudi output cuts and geopolitical risks supported demand. 

Where are oil prices headed?

-Oil prices fell in the previous session after data showed US inventories fell less than analysts expected. US crude oil stock in the Strategic Petroleum Reserve (SPR) rose by around 1,000 barrels last week, the first increase since January 2021, according to Energy Information Administration (EIA) data.

-The Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have said that China's demand is expected to continue to rise in the second half of this year and remain the main driver of global growth.

-IEA said that the crude oil demand is set to hit a record high this year but slightly less than anticipated. Demand is expected to reach 102.1 million barrels per day (bpd), the IEA lowered its forecast for growth of the first time this year, by 220,000 bpd, to 2.2 million bpd.

-Crude prices may struggle to find a clear direction given a mixed global demand outlook in the next few weeks, Citi analysts said in a note. Demand is "a mixed picture with stronger gasoline and jet fuel demand, but weaker petchems and diesel," the analysts told news agency Reuters.

Technical View

‘’Extended dip below 6,140 may weaken the prices. Whereas, a rebound above 6,240 may strengthen the prices for the day,'' said Religare Broking on MCX crude oil August outlook. The brokerage sees a turnaround at 6,140 and other technical levels between 6,240- 6,580.

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First Published:20 Jul 2023, 09:54 PM IST
HomeMarketsCommoditiesOil extends gains over cautious trading, lower US crude stocks; Brent near $80/bbl

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