By Adedapo Adesanya
Brent crude jumped by 40 cents or 0.5 per cent to $76.65 per barrel on Wednesday, and the US West Texas Intermediate (WTI) crude gained $2 or 2.9 per cent to sell at $71.79 per barrel after the market resumed from the Independence Day holiday.
There was no WTI settlement on Tuesday because of the US holiday, so trade yesterday had a catching up with Brent’s gains the previous day.
According to Reuters, both benchmarks hit their highest level in nearly two weeks during Wednesday’s session.
Saudi Arabia, the world’s biggest crude exporter, on Monday, said it would extend its voluntary output cut of 1 million barrels per day to August.
It was later joined by Russia and Algeria, which lowered their August output and export levels by 500,000 barrels per day and 20,000 barrels per day, respectively.
To affirm this, Saudi energy minister Prince Abdulaziz bin Salman said in the midweek session that Russia-Saudi oil cooperation is still going strong as part of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+.
He said they will do “whatever necessary” to support the market.
“Part of what we have done (on Monday) with the help of our colleagues from Russia was also to mitigate the cynical side of the spectators on what is going on between Saudi and Russia on that specific matter,” Prince Abdulaziz said.
“It is quite telling seeing us on Monday coming out with not only our (oil cut) extension… but also with validation from the Russian side,” he added.
Meanwhile, Morgan Stanley lowered its oil price forecasts, 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 slump in global factory activity, reflecting sluggish demand in China and Europe.
In the eurozone, manufacturing contracted faster than initially thought, as persistent policy tightening by the European Central Bank (ECB) squeezed finances, and in Britain, the pace of decline steepened as optimism faded.
In Asia, factory activity expanded marginally in China, adding to evidence the world’s second-largest economy lost steam in the second quarter.
Market attention is also focused on interest rates, with US and European central banks expected to increase rates further to tame stubbornly high inflation.
Weekly data from the American Petroleum Association (API), followed by government data from the Energy Information Administration (EIA), is expected on Thursday after both were delayed by a day because of the holiday.
Dipo Olowookere