WTI crude oil prices rose about 3% in the session on July 5, after the US July 4th holiday. At the end of this session, WTI crude oil prices increased by 2 USD compared to the closing price on July 3 to 71.79 USD/barrel. Meanwhile, Brent crude oil prices increased by 40 cents (0.5%) to 76.65 USD/barrel, after increasing by 1.60 USD/barrel on July 4.
Saudi Arabia, the world's largest crude oil exporter, said on July 3 that it would extend its voluntary production cut of 1 million barrels per day until August 2023. Russia and Algeria voluntarily reduced their production and oil exports in August 2023 by 500,000 barrels per day and 20,000 barrels per day, respectively.
Voluntary cuts in July 2023 and an extension to August 2023 would tighten the oil market significantly, but investors will stay on the sidelines until inventories are significantly reduced, said UBS analyst Giovanni Staunovo.
Market sources cited data from the American Petroleum Institute (API) as saying that US crude oil inventories fell by about 4.4 million barrels last week, while gasoline and distillate inventories rose.
Oil prices were little changed after the API data, released late on July 5. Government data on oil inventories will be released at 10 p.m. on July 6.
Traders said July 4 marks the peak of the U.S. travel season and this week’s oil inventory reports could play a big role in pushing oil prices higher or lower.
Morgan Stanley has cut its oil price forecast, predicting a market surplus in the first half of 2024 with non-OPEC supply growing faster than demand next year.
Recent surveys have shown a decline in factory activity globally, reflecting slowing demand in China and Europe.
Market attention is also focused on interest rates, with US and European banks expected to raise rates further to curb high inflation.
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