Futures Movers: U.S. oil benchmark edges down from 2023 high

Posted By: EN Todayon: August 10, 2023In: General Energy News, Oil & Gas News

Oil futures edged lower early Thursday, pausing a rally that saw the U.S. benchmark end the previous session at a 2023 high.

Price action

West Texas Intermediate crude for September delivery
CL00,
-0.50%

CL.1,
-0.50%

CLU23,
-0.50%
fell 18 cents, or 0.2%, to $84.22a barrel on the New York Mercantile Exchange, after ending Wednesday at its highest since Nov. 16.
October Brent crude
BRN00,
-0.25%

BRNV23,
-0.25%,
the global benchmark, was down 12 cents, or 0.1%, at $87.43 a barrel on ICE Futures Europe. It finished Wednesday at its highest since Jan. 23.

Market drivers

Crude oil prices have risen sharply since late June, finding support on supply concerns as Saudi Arabia implemented a voluntary production cut of 1 million barrels a day in July, which it recently announced would be extended through September. Russia has also moved to limit crude exports, extending an additional reduction of 300,000 barrels a day through the end of September.

Crude had previously suffered amid disappointment over China’s economic performance following the lifting of COVID curbs late last year, but crude has this week shaken off further signs of weakness in China’s economy.

“There was a time not long ago when if China sneezed, oil markets would tank,” said Stephen Innes, managing partner at SPI Asset Management, in a note.

“However, Saudi and Russian production cuts, providing the China offset, and resilient U.S.-driving season demand round out the new bullish oil market thesis,” he said. “Yes, the more OPEC+ cuts production in the middle of the peak U.S. summer driving season, predictably, the higher oil prices will go.”

That said, rising fuel prices are triggering “alarm bells” in capital markets, Innes observed, raising questions about expectations for a smooth, continued fall in inflation pressures.