Positive Signs Boost Oil Prices

Oil prices rose today, Tuesday, extending gains made in the previous session, as signs of supply cuts and the Chinese authorities’ pledge to support the world’s second-largest economy lifted morale.

Brent crude futures rose 7 cents to $82.81 a barrel at 0007 GMT, while US West Texas Intermediate crude futures rose 11 cents to $78.85.

Expectations of Supply Cuts Drive Up Prices

Both benchmarks rose more than 2% the previous day, hitting their highest close since April, according to Reuters.

They have already risen for four consecutive weeks due to expectations of supply cuts due to production cuts announced by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, the group known as OPEC+.

Chinese Economy Focuses on Domestic Demand

In China, the world’s second-biggest oil consumer, leaders have pledged to step up policies to support the economy amid the fragile post-COVID-19 recovery, with a focus on boosting domestic demand.

Weak Global Economy Remains a Concern

However, disappointing data from the Eurozone and the US confirmed the weakness of the global economy.

The survey showed that business activity in the eurozone contracted much more than expected in July, with demand falling in the bloc’s dominant services sector and factory production falling at the fastest pace since Covid-19 began.

In the United States, business activity fell to a five-month low in July due to a slowdown in the services sector.

U.S. Crude Oil Inventory Data Awaited

U.S. crude oil inventory data will be released later Tuesday. Crude inventories fell on average by about 2 million barrels in the week ended July 21, according to four analysts polled by Reuters.