- Oil prices are set to post a third consecutive weekly gain, with Brent nearing $81 and WTI changing hands for $76.41.
- Bullish sentiment is building in oil markets despite continued economic headwinds and the IEA reducing its oil demand growth forecast.
- Supply disruptions in Libya, Saudi Arabia’s production cut, and signs of lower Russian oil exports all gave oil prices a boost this week.
Crude oil prices were set to book their third week of gains today as fundamentals begin to resurface as a factor for traders. In pre-noon trade in Asia Brent crude was trading at close to $81 per barrel and West Texas Intermediate was changing hands for $76.41 per barrel, not least because of production disruptions in Libya. Prices moved higher despite a new oil demand estimate from the International Energy Agency that said it expected demand to grow more weakly than previously estimated, because of slower economic growth. The agency continues to see a record-high global oil demand in 2023, at 102.1 million barrels per day, its closely-watched Oil Market Report showed on Thursday. However, the pace of growth in demand was lowered by 220,000 bpd from last month’s projection, the first downward revision to oil demand growth for this year from the IEA. “Persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year,” the agency said. On the other hand, the U.S. reported lower inflation figures than expected, which stimulated expectations about greater oil demand that would be bullish for prices in a tight-supply environment, contributing to the oil benchmarks’ weekly performance. In addition, the first signs are emerging of lower Russian oil exports, contributing to the tighter supply environment perception. “Crude prices are getting a boost from expectations that the oil market will get very tight as Libya and Nigeria deal with disruptions, also while Russian crude exports finally decline,” Reuters quoted OANDA senior analyst Edward Moya as saying. Prices have “some room to run with the oil balance looking increasingly tight for the remainder of the year,” the head of commodities for the Commonwealth Bank of Australia, Vivek Puri, told Bloomberg.
Russia’s Crude Oil Exports Start To Show Signs Of Decline
After months of high crude oil exports by sea, Russian shipments have started to show the first signs of a decline as they dropped below the levels from February, the baseline for Russia’s oil production cut of 500,000 barrels per day (bpd) that Moscow says began in March. Russian crude oil exports by sea dropped by 205,000 bpd to 3.21 million bpd on a four-week average basis in the four weeks to July 9, tanker-tracking data monitored by Bloomberg showed on Tuesday. The latest four-week average export volumes fell below the 3.38 million bpd in the four weeks to February 26, after holding up above that level for months, according to the data reported by Bloomberg’s Julian Lee The main reason for the lower seaborne exports was significantly reduced shipments from Russia’s western ports, the data showed. In the week to July 9, seaborne crude exports out of Russia dipped to 2.86 million bpd, which was 1 million bpd lower than in the previous week, and with no signs of maintenance at ports that had dragged shipments down two weeks ago. Most of the weekly decline in shipments – 80% — was due to lower volumes leaving Russia’s western ports, which used to ship crude to Europe before the embargo. The observed decline in Russian crude oil exports on a four-week average basis comes just as Russia said last week that it would cut its crude oil exports by 500,000 bpd in August in a bid to ensure a balanced market.