Gasoline prices today (July 8): Soared to the highest level in 9 weeks

Supply concerns and technical buying have pushed oil prices to a nine-week high, with Brent crude rising to nearly $79 a barrel.

World oil prices

Oil prices rose sharply by about 3% to a nine-week high at the end of the week, driven by supply concerns and technical buying, despite the possibility that further interest rate hikes could slow economic growth and reduce oil demand.

Gasoline prices skyrocketed in the last trading session of the week, consolidating the upward momentum of the week. Illustration photo: Reuters

Brent crude futures rose $1.95, or 2.6%, to $78.47 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $2.06, or 2.9%, to $73.86 a barrel. That was the highest close for Brent since May 1 and for WTI since May 24. Both benchmarks posted gains of about 5% for the week.

Phil Flynn, an analyst at Price Futures Group, said prices were on the rise. “I think you’re seeing some short covering here… because a lot of people have been betting on this,” Flynn said.

After two months of price consolidation between $73 and $77 a barrel, Brent crude has moved into technically overbought territory for the first time since mid-April.

“The recovery from last week so far has been quite strong and supported by momentum and new cuts from Saudi Arabia and Russia,” said Craig Erlam, senior market analyst at OANDA.

The world's top two oil exporters, Saudi Arabia and Russia, announced new production cuts this week, bringing the total OPEC+ cuts to about 5 million barrels per day, or about 5% of global oil demand.

“OPEC+ production cuts are expected to tighten the market, leading to a supply deficit in the second half of 2023, supporting higher oil prices,” analysts at US financial services firm Morningstar said.

OPEC is likely to maintain its bullish view on oil demand growth next year, according to sources close to the group. OPEC’s forecast for 2024 is likely to be lower than the growth it expects this year of 2.35 million barrels per day, or 2.4% of global demand.

In the United States, energy companies added oil and natural gas rigs this week for the first time in 10 weeks, led by the biggest weekly increase in gas rigs since October 2016, according to energy services firm Baker Hughes Co (BKR.O).

Meanwhile, in Norway, Equinor ASA has suspended production at the Oseberg East oil field in the North Sea due to staffing shortages.

Gasoline prices have increased by about 5% this week. Illustration photo: Reuters

In Mexico, a fire broke out at an offshore rig operated by state-owned oil company Pemex in the Gulf of Mexico on July 7, injuring six people.

One factor supporting oil prices was the dollar falling to a two-week low after data showed U.S. job growth was weaker than expected but still strong enough to keep the Federal Reserve on track to raise interest rates later this month.

According to CME Group's FedWatch Tool, the probability of the Fed raising interest rates by another 25 basis points at its meeting on July 25-26 is now around 95%, up from 92% just before the data was released on July 6.