11-7-2023 (JAKARTA) Oil prices strengthened in Asian trade on Tuesday afternoon, recovering some losses from the previous session as traders focused on supply cuts by the world’s largest oil exporters, Saudi Arabia and Russia, and a weaker US dollar.
Brent crude futures rose 31 cents or 0.4%, trading at $78 per barrel at 06:26 GMT, while US West Texas Intermediate crude oil increased 35 cents or 0.5%, trading at $73.34 per barrel.
The supply cuts by Saudi Arabia and Russia, set for August, are expected to boost benchmark prices, which are also supported by a weaker US dollar that fell to a two-month low. A weaker dollar makes crude oil cheaper for holders of other currencies and often boosts oil demand.
“Oil has found a bottom, and the only thing…that could break it is if US inflation gets really hot and the Fed is forced to tighten this economy into a recession,” said Edward Moya, an analyst at OANDA.
While central bank officials say the US Federal Reserve is likely to need to raise interest rates further to tame inflation, markets are comforted by indications that officials also believe the current monetary policy tightening cycle is coming to an end.
“China’s decision to increase support for the real estate sector with the aim of further shoring up confidence is helping to boost oil prices,” said Tina Teng, an analyst at CMC Markets.
The market will closely monitor China’s new yuan loans and trade balance data, as well as US inflation in the coming days, Teng said.
Traders are also awaiting crude oil inventory data from the American Petroleum Institute (API), which will be released on Tuesday night. Analysts expect an increase of 200,000 barrels.
