NEW YORK: Oil prices rose to three-month highs on Tuesday (July 25), as signs of tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy lifted sentiment.
Brent futures settled up 90 cents at US$83.64 (RM381.81) a barrel, after hitting US$83.87 earlier, the highest since April 19.
US West Texas Intermediate (WTI) crude rose 89 cents to US$79.63 (RM363.15). The contract earlier rose to US$79.90 a barrel, also the highest since April 19.
The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the Organization of the Petroleum Exporting Countries (Opec) and allies.
Earlier-loading Brent contracts are selling above later loadings, a price structure known as backwardation indicating traders see tight supply, with the six-month spread near a 2½-month high.
“The market is getting more concerned about the trend of tightening oil supplies, and it’s becoming more obvious to the naysayers that the expected drop-off in demand isn’t happening,” Price Futures Group analyst Phil Flynn said.
In China, the world’s second-biggest oil consumer, leaders pledged to step up economic policy support.
Still, some economic data limited gains. In the eurozone, business activity shrank more than expected in July, a survey showed.
In the United States, business activity slowed to a five-month low in July, a closely watched survey showed. But falling input prices and slower hiring indicate the Federal Reserve could be making progress in its bid to reduce inflation. Markets anticipate 25-basis-point rate hikes from both the Fed and the European Central Bank this week.
US crude oil and distillate inventories gained last week, while petrol stockpiles fell, according to market sources citing American Petroleum Institute figures on Tuesday.
Sending a bearish signal, a 110,000-barrel-per-day unit at the huge US refinery in Baton Rouge will be shut for up to four weeks, sources said. – Reuters
