By Adedapo Adesanya
Crude oil prices appreciated on Friday on signs of slowing US output, with Brent gaining 68 cents or 0.8 per cent to settle at $84.80 a barrel and the US West Texas Intermediate (WTI) going up by 86 cents or 1.1 per cent to $81.25 per barrel.
Prior to now, Brent crude had gained about 18 per cent, and WTI gained 20 per cent over the seven weeks which ended on August 1, though both crude benchmarks ended their longest weekly rally of 2023 on mounting concerns about global demand growth.
Both benchmarks pushed higher on Friday after industry data showed that the US oil and natural gas rig count, an early indicator of future output, fell for the sixth week in a row.
A slump in US production could worsen an anticipated supply tightness through the rest of this year.
Those concerns, spurred on by output cuts from the Organisation of the Petroleum Exporting Countries and allies (OPEC+) have helped oil prices gain for seven straight weeks since June.
This week, however, oil prices dropped about 2 per cent from last week, as a worsening property crisis in China added to concerns about the country’s sluggish economic recovery and reduced investors’ appetite for risk across markets.
China unexpectedly lowered several key interest rates earlier this week in a bid to boost economic activity and is expected to loan rates on Monday, but analysts warned that this might not have the necessary impact as the world’s largest oil importer needs more forceful measures to tackle the economy’s downward spiral.
Pressure is also mounting as the US Federal Reserve may not have finished raising interest rates to tackle inflation.
Higher borrowing costs can impede economic growth and, in turn, reduce the overall demand for oil.
Market analysts have also raised concerns that investors remain focused on the tension between slowing global growth and still-tight global supplies. Adding that prices are likely to remain range-bound for now.
