By Adedapo Adesanya
Brent crude price hit a three-month high on Tuesday after it moved up by 90 cents to $83.64 a barrel as the US West Texas Intermediate (WTI) crude rose by 89 cents to $79.63 per barrel.
The prices were supported on their way to the top on the back of signs of tighter supplies and pledges by Chinese authorities to shore up the economy.
The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+).
Market analysts noted that this price range is happening as the market is getting more concerned about the trend of tightening oil supplies, and it’s becoming more obvious that the expected drop-off in demand is not happening.
Extra support is coming from China, the world’s largest importer, as it stepped up to provide economic support since economic data has shown that the country is not meeting its forecasts.
On Monday, China took a step to boost policy support for the economy amid a complex post-COVID recovery, focusing on boosting domestic demand, signalling more stimulus steps.
The world’s second-largest economy grew at a weak pace in the second quarter as demand weakened at home and abroad, raising pressure on policymakers to deliver more stimulus to shore up post-COVID recovery.
According to the Politburo, a top decision-making body of the ruling Communist Party,
China will step up economic policy adjustments, focusing on expanding domestic demand, boosting confidence, and preventing risks.
While China is on track to hit its modest 2023 growth target of around 5 per cent, there are risks of the annual goal being missed for the second year in a row, analysts said.
Also, in the US and the Eurozone, business activity slowed in July, surveys showed.
In the US, falling input prices and slower hiring indicate the Federal Reserve could be making progress in its bid to reduce inflation. Markets anticipate 25-basis-point rate hikes from both the US Federal Reserve and the European Central Bank (ECB) this week.
Pressure came as Crude oil inventories in the United States unexpectedly rose this week by 1.319 million barrels, the American Petroleum Institute (API) data showed on Tuesday after decreasing by 797,000 barrels in the week prior.
Analysts were expecting a draw of 1.969 million barrels in U.S. crude-oil inventories. According to API data, the total number of barrels of crude oil gained so far this year is more than 35 million barrels, although the net draw in crude inventories since April is just under 12 million barrels.
US government data on inventories from the Energy Information Administration (EIA) is due later on Wednesday.
Modupe Gbadeyanka