Oil prices settled higher in the previous session but posted its fourth straight quarterly decline as worries of a sluggish global economic activity impacting overall fuel demand weighed on investor sentiment. Further interest rate hikes by global central banks limited gains in oil prices. Saudi Arabia’s plan to cut its output by 1 million barrels per day (bpd) comes into effect this month, amid a broader deal by Organization of the Petroleum Exporting Countries and its allies or OPEC+ to limit supply into 2024.
Benchmark Brent crude futures for August delivery which expired on June 30, settled up 56 cents, or 0.8 per cent, at $74.90. In the three months to the end of June, the contract finished down six per cent. In early trading on Friday, Brent crude oil prices were little changed, but were set to notch their first monthly gain this year as a steep drawdown as OPEC+ plans to cut output outweighed demand fears stemming from rising interest rates.
US West Texas Intermediate crude (WTI) settled up 78 cents, or 1.1 per cent at $70.64 a barrel. The benchmark posted its second straight quarterly drop, down about 6.5 per cent in the latest three months.
Brent crude futures are down about 14 per cent since the start of the year as rising interest rates hit investor appetite, while China’s promising economic recovery has faltered after months of softer-than-expected consumption and production.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a July 19 expiry, settled 1.2 per cent higher at ₹5,807 per bbl on June 30, having swung between ₹5,728 and ₹5,841 per bbl during the session so far, compared to their previous close of ₹5,738 per bbl. Overall, prices have been under pressure from rising interest rates in key economies and a slower than expected recovery in China.
Rate hike concerns, Saudi output cut, and more: Key factors driving crude oil markets next week
-In the previous OPEC+ meeting on June 4, no changes in global oil output were announced for the remainder of this year. However, Saudi Arabia’s output will decline to 9 million barrels per day from about 10 million barrels in May, as per its fresh production cuts set to kick in from July. The world’s largest oil producer, undertakes voluntary crude oil output cuts which have kicked in from July 1. Going forward, oil prices will take cues from a tighter supply in market.
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Updated: 02 Jul 2023, 09:58 PM IST