Oil Prices Continue To Strengthen Amid Demand For Better

Crude oil illustration (Photo: unsplash)

JAKARTA - crude oil prices continued to strengthen in trading at the end of trading, Friday, June 16 New York time. The weekly rise was due to China's higher demand and OPEC+ supply cuts lifting prices despite forecasts of weakening in the global economy and prospects for further interest rates hikes.

West Texas Intermediate (WTI) crude futures for July delivery added 1.16 dollars, or 1.64 percent, to settle at 71.78 dollars a barrel on the New York Mercantile Exchange.

Brent crude futures for August delivery rose 0.94 dollars, or 1.24 percent, to close at 76.61 dollars a barrel on the London ICE Futures Exchange.

For this week, Brent posted a weekly increase of 2.4 percent and WTI rose 2.3 percent.

Oil has risen this week amid hopes of increasing China's demand. China's refinery Throughput (processing rate) rose in May to a record second-high total and Kuwaiti CEO Petroleum Corp expects China's demand to continue to rise during the second half.

Oil traders continue to add to their buying positions to anticipate higher demand for oil arising from China's support policy.

Oil rose as the prospects for short-term fundamentals appear to have changed, with Europe's diesel premium soaring and as China provides massive crude oil import quotas, said Edward Moya, senior market analyst at OANDA, a supplier of multi-asset online trading services.

China's crude oil imports may become strong after the stimulus flows through the economy, according to Moya.

Meanwhile, Vladimir Zernov, analyst with market information supplier FX Empire, attributed the increase in oil prices to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its partners to additional cuts by Saudi Arabia in July as well as China's economic stimulus.

Russian Energy Minister Nikolai Shulginov said it was "realistic" to reach an oil price of around 80 US dollars per barrel, Russia's state news agency reported.

Shulginov also said Russia's oil and gas condensate production is expected to drop by around 20 million tonnes (40.000 barrels per day) this year, repeating Russia's expectations.

In Iran, crude oil exports and oil production have reached new highs in 2023 despite US sanctions, according to consultants, shipping data and sources familiar with the matter, adding to global supplies as other manufacturers limit production.

The United States has 552 active oil drilling rigs this week, four rigs less than the previous week, while Canada added 18 active oil drilling rigs to 103 this week, according to data released by oil services company Baker Hughes on Friday (16/6/2023).