Hopes of further supply cuts support Brent's upward move

The front-month ICE Brent contract has moved up by $0.25/bbl on the day, to $85.24/bbl at 09.00 GMT.

PHOTO: An oil pump nozzle and stock market chart. Getty Images

Upward pressure:

Brent continued its upward movement following recent comments from the US Federal Reserve chairman Jerome Powell. Powell said that the US economy can achieve a “soft landing” in 2023, Reuters reports.

“The increased possibility of a US soft landing also supports oil’s bullish thesis,” said SPI Asset Management’s analyst Stephen Innes.

Meanwhile, oil traders expect Saudi Arabia to extend its voluntary output cut of 1 million b/d into September, when the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) hold their monthly joint ministerial monitoring committee meeting on 4 August.

“Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight,” said Ed Moya, OANDA’s market analyst.

Downward pressure:

China’s Politburo, the highest state planner of the Communist Party, released additional policy guidelines to improve the country’s economic activities at a press conference on Monday. However, the Chinese officials did not announce any concrete measures or policies to support the country's economic growth, according to a Reuters report.

Brent has felt some downward pressure in recent days due to concerns about the slow pace of economic recovery in China amid recurring COVID-19 outbreaks.

By Aparupa Mazumder

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