Oil prices rose by more than 1%, during trading today, Friday, July 15, 2022, after US statements that an immediate increase in Saudi oil production is not expected, following US President Joe Biden’s visit to the Kingdom.
This comes with further support from indications that the US Federal Reserve may raise interest rates less sharply than expected.
Oil Prices Today
The price of the futures contract for the benchmark Brent crude – for September delivery – increased by 1.46%, to record 101 dollars per barrel.
The price of West Texas Intermediate crude futures – August delivery – also rose by 1%, to $ 97.45 a barrel, according to data seen by the specialized energy platform.
Oil prices ended their trading Thursday, down 0.5%, after falling to their lowest level since February 23.
A US official said that Washington does not expect Saudi Arabia to boost oil production immediately, and is awaiting what the OPEC + alliance will decide at its next meeting on August 3, Reuters reported.
The US official’s comment on Saudi oil production comes at a time when the production capacity of members of the Organization of Petroleum Exporting Countries (OPEC) is declining, as most producers are pumping to their maximum capacity.
The statements also come hours before the arrival of US President Joe Biden in Jeddah, to attend the summit of the Gulf allies, as the coalition is expected to call for more oil pumping.
For its part, the UAE announced its efforts to support stability in the oil markets and adhere to the decisions of OPEC +.
Diplomatic Adviser to the President of the UAE, Anwar Gargash, said that Abu Dhabi would support any agreement between Saudi Arabia and the United States if it was concluded during US President Joe Biden’s visit to the kingdom this week.
Saudi Arabia, along with the UAE, has the bulk of spare capacity within the OPEC + group, but Riyadh and Abu Dhabi have repeatedly stressed that they will not act unilaterally.
“Oil is largely trading under the influence of Federal Reserve policy and the ramifications of destroying demand and supporting the US dollar,” said Stephen Innes, managing partner at SBI Asset Management.
“With the market reversing back to the base high of 75 (base points) next week, versus 100 (basis points) yesterday, oil prices and the broader market have a little more room to breathe today,” Ennis added.
The Fed’s more hawkish policymakers said Thursday they favor another 75 basis point rate hike at the Fed’s policy meeting this month, rather than the larger rate hike that traders have been racing to price after a report on Wednesday showed That inflation is accelerating.
Uncertainty over rate hikes and weak economic data pushed both oil contracts to their lowest levels on Thursday, which were lower than the close on Feb. 23, a day before Russia invaded Ukraine in what Moscow calls a “special military operation”.
However, Brent and WTI recovered almost all of the losses by the end of the trading session, however concerns about the demand outlook continue to dominate oil prices.
Demand In China
“The renewed outbreak of coronavirus in China, which threatens to halt the recovery in demand, has not helped, and higher prices appear to have dampened US gasoline demand,” ANZ analysts said.
Data on Friday showed that the productivity of Chinese refineries shrank in June by about 10% from the previous year, with production in the first half of the year declining by 6% in the first annual decline for the period since at least 2011.
In the meantime, US President Joe Biden will fly today, Friday, to the Kingdom of Saudi Arabia, where he will attend the summit of the Gulf allies and invite them to pump more oil.
However, spare capacity in members of the Organization of the Petroleum Exporting Countries is declining, with most producers pumping at full capacity, and it is unclear how much more Saudi Arabia can bring to market quickly.
Algeria displaces Russia from the ranking of the second largest supplier of pipeline gas to Europe
Algeria has jumped to the second largest supplier of gas pipelines to Europe, surpassing Russia, with the decline in supplies from Moscow to the old continent in light of geopolitical tensions and technical problems.
And the gas expert at the Organization of Arab Petroleum Exporting Countries (OAPEC), Wael Hamed Abdel-Moati, revealed that for the first time, Russia has fallen to third place behind Algeria, in the list of the largest supplier of gas through pipelines to Europe due to the stops of the Nord Stream 1 line.
Russia’s Gazprom reduced the capacity along the Nord Stream 1 pipeline from Russia to Europe to just 40% of the usual levels last month, citing a delay in the return of gas turbines from Canada.