Crude oil prices witnessed some declines at the beginning of this week’s trading, while West Texas Intermediate (WTI) crude oil futures for August delivery rose to $77.05 a barrel, at the height of the Asian markets’ trading session today.
US and Brent crude oil prices recorded gains of 1.88% and 1.56% respectively by the end of last week’s trading. These gains came by taking advantage of the announcement and talk about more government support for the private sector in China, especially after the recent disappointing figures for the Chinese economy, such as the GDP figures for the second quarter, which were mixed.
Crude oil prices also benefited from the escalation of military actions between Russia and Ukraine in the Black Sea and the consequent cancellation of Ukrainian grain exports through it. In addition, Russian oil shipments across the Black Sea could stop in the event of an escalation of the conflict, which would lead to further increases in oil prices. This is focusing minds on energy trading desks around the world as we move into the last week of July.
US Baker Hughes rig count decline
Also, we witnessed a continued decline in the number of US rigs that extended from mid-June to 530 last week, down from 537 in the week before, according to Baker Hughes.
The decline in the number of rigs also came after the decline in the oil inventories of US companies by about 700 thousand barrels, compared to the expected withdrawal of 2.44 million barrels.
These rises in crude oil prices come after the OPEC + group of oil exporting countries continued to reduce their oil production.
Powell speech on Wednesday will be closely watched
As for this week, the markets are awaiting more important developments, most notably the announcement of the Federal Reserve’s decision on interest rates on Wednesday, which is largely expected to raise by 25 basis points.
The focus will be on Jerome Powell’s tone in his post-meeting speech, in an attempt by the markets to anticipate the likely course of interest rates for the rest of this year and an associated effort to strengthen the market’s hypothesis that the expected hike this week will be the last in the process of monetary tightening this year. A less hawkish speech than expected may lead to a weakening of the US dollar and thus support oil prices.
We also await the European Central Bank’s interest rate decision on Thursday, in addition to more important data from the US economy, most notably the GDP numbers for the second quarter and the Personal Consumer Expenditure (PCE) figures for the month of June.
