While the supply cuts in Saudi Arabia and Russia increased reference oil benchmark prices, the Dollar dropped to a 2-month low, providing support to the market. US Fed officials say the tightening cycle is over.
Oil prices rose on Tuesday, offsetting some of the losses in the previous session, as traders focused on supply cuts from the world’s biggest oil exporters Saudi Arabia and Russia and the weakening US dollar.
Brent crude futures rose 31 cents or 0.4%, at 0626 GMT to $78 a barrel, and West Texas Intermediate crude was up 35 cents, or 0.5%, at $73.34.
Supply cuts by the world’s largest oil exporters, Saudi Arabia and Russia, for August helped boost reference prices, supported by the US dollar falling to a two-month low. A weaker dollar makes crude oil cheaper for holders of other currencies, often increasing demand for oil.
Oil has found a foothold, and the only thing that can break it is if US inflation is so high that the Fed has to put this economy into recession.
While central bank officials said it would likely need to raise interest rates further to curb inflation, markets were comforted by indications that officials thought the current cycle of monetary policy tightening was nearing its end.
China’s decision to increase support for the real estate sector to further boost confidence is helping the rise in oil prices. China’s new yuan loans, trade balance, and US inflation data will be closely watched by the markets in the coming days.
Traders are also looking forward to the US crude oil stock data, which will be released on Tuesday by the American Petroleum Institute industry group (API). Analysts are expecting an increase of 200,000 barrels.
