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Business News/ Markets / Commodities/  Oil set for fourth straight week of gains amid tightening supply; Brent at $80/bbl
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Oil set for fourth straight week of gains amid tightening supply; Brent at $80/bbl

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a August 21 expiry, were last trading higher by 1.34 per cent at ₹6,294 per bbl, having swung between ₹6,230 and ₹6,308 per bbl during the session so far

The oil market is starting to slowly price in a looming supply crunch as it is on track for its fourth week of price gainsPremium
The oil market is starting to slowly price in a looming supply crunch as it is on track for its fourth week of price gains

Oil prices rose more than a dollar and rallied towards irs fourth straight weekly gain on Friday, July 21, driven by growing evidence of supply shortages in the coming months and rising tensions between Russia and Ukraine that could further hit supplies. Russia hit Ukrainian food export facilities for a fourth day in a row on Friday and seized ships in the Black Sea, leading to escalation of tensions in the region since Moscow's withdrawal this week from a UN-brokered safe sea corridor agreement.

Brent crude futures rose 90 cents, or 1.1 per cent, to $80.54 a barrel. US West Texas Intermediate futures rose 97 cents, or 1.3 per cent, to $76.62 a barrel. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a August 21 expiry, were last trading higher by 1.34 per cent at 6,294 per bbl, having swung between 6,230 and 6,308 per bbl during the session so far, compared to their previous close of 6,211 per bbl.

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

"The oil market is starting to slowly price in a looming supply crunch as it is on track for its fourth week of price gains," Price Futures Group analyst Phil Flynn told news agency Reuters. "Global supplies are starting to tighten and that could accelerate dramatically in the coming weeks. Increased war risk could also impact prices," he added.

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.

Meanwhile, investors welcomed stimulus measures designed to reinvigorate China's sluggish economy. Data from the world's second-biggest oil consumer suggests the government's five per cent annual growth target will be missed. On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics.

"We estimate the supply and demand balance for oil in the $75-95 range for 2024, as limited OPEC supply and good demand in the US is offset somewhat by weaker-than-expected demand in China as its economic recovery continues to lag," said Jay Hatfield, chief executive officer at Infrastructure Capital Management.

Separately on Friday, UAE Energy Minister Suhail al-Mazrouei told Reuters that current actions by OPEC to support the oil market were sufficient for now and the group is "only a phone call away" if any further steps are needed.

 

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Published: 21 Jul 2023, 10:38 PM IST
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