Oil prices rise on supply shortages
Chinese customs data shows 31% drop in Saudi shipments to China from June to July
Futures contracts for September delivery of WTI are scheduled to reach their expiration date on Tuesday
WTI surpasses $81 while Brent hovers near $85, markets now speculate the 90-dollar threshold
Markets gear up for the Jackson Hole Forum this week
Oil prices have once again surpassed the $80 mark
As supply shortages persist, Brent crude broke the $85 handle to $85.40 per barrel, while WTI hovers around $81.90 per barrel. Serving as a counterbalance to offset worries about global demand which have been pressuring the oil market recently.
On a side note, the futures contracts for West Texas Intermediate, set for delivery in September, will expire on Tuesday.
Oil prices were seen declining last week, primarily due to concerns about the Chinese economy's slowdown. China, being the largest oil importer, plays a crucial role. Nonetheless, the ongoing scarcity in oil supplies has offset these losses, leading to a resurgence of upward momentum in prices.
Simultaneously, China persists in relying on record-high inventories accumulated earlier this year. This strategic approach serves as a countermeasure to reduced purchases by refineries, which were prompted by supply cuts imposed by OPEC+. Consequently, global oil prices have surpassed the significant threshold of $80 per barrel.
Recent data from Chinese customs indicates a substantial 31% decrease in Saudi shipments to China between June and July. Meanwhile, Russia maintains its position as the primary provider of discounted crude to the Asian powerhouse. Taking advantage of robust export margins, Chinese refineries have also augmented the export of refined products in July.
European stocks have started the week on the green side
After closing at the lowest levels in six weeks, European stocks edged higher this Monday as the Euro Stoxx index rises 0.2% with gains led by oil and gas stocks. Oil prices have too gone up following a drop in exports from Saudi Arabia and Russia. This has helped ease concerns about global demand, especially as central banks continue to raise interest rates.
On the same note, the CAC40 nudged higher by 0.8%, while the DAX index and the FTSE100 index were last seen higher by 0.5% and 0.2%, respectively.
The People's Bank of China has made an unexpected reduction in the benchmark lending rate for one year. However, the five-year interest rate remains unchanged. Last week, the People's Bank of China made surprising cuts to short- and medium-term lending rates. This moves highlighted concerns about weak credit growth and potential contraction risks.
Meanwhile focus now shifts to the upcoming Jackson Hole Forum, scheduled for this Thursday. As investors tune in for any indications regarding future interest rate trends.