Oil prices rise on tighter supply, China hopes

Oil prices rise on tighter supply, China hopes

Oil prices rose for the third consecutive session on Tuesday, driven by indications of tighter supplies and commitments from Chinese authorities to support their economy. Brent futures increased by 0.3% to $82.96 a barrel, while U.S. West Texas Intermediate (WTI) crude rose by 0.3% to $78.97. Both benchmarks had risen over 2% the previous day, reaching their highest closes since April.

The prices of crude oil have been steadily climbing for four weeks due to anticipated supply reductions from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia. Some analysts believe that prices could continue to rise in the short term.

Edward Moya, an analyst at OANDA, stated that energy traders are becoming more confident that global central bank tightening will soon come to an end, which should support global growth.

In China, the second-largest economy and second-largest oil consumer in the world, leaders have pledged to increase policy support for their economy as it undergoes a challenging recovery from the COVID-19 pandemic. Their focus is on boosting domestic demand.

However, bearish data from the euro zone and the United States highlights weaknesses in the global economy. In the euro zone, business activity contracted more than expected in July, with declining demand in the dominant services industry and a sharp decline in factory output. In the United States, business activity slowed to a five-month low in July, primarily due to decelerating growth in the service sector. Despite these challenges, falling input prices and slower hiring indicate progress in the Federal Reserve’s efforts to reduce inflation.

Investors have already factored in quarter-point interest rate hikes from the Federal Reserve and the European Central Bank this week. The focus will now be on the statements of Fed Chair Jerome Powell and ECB President Christine Lagarde regarding future rate increases.

Later on Tuesday, industry data on U.S. crude inventories is expected. Analysts estimate that crude inventories fell by approximately 2 million barrels in the week ending July 21.

In conclusion, oil prices have risen due to expectations of tighter supplies and support from Chinese authorities. However, bearish data from the euro zone and the United States indicates weaknesses in the global economy. Investors are now awaiting statements from central bank leaders, and industry data on U.S. crude inventories is also anticipated.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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