Oil prices rose for the fifth straight week as global oil supplies tightened

Tightening global oil supplies, coupled with market expectations that the Federal Reserve's tightening policy will be coming to an end, pushed crude oil prices to record their longest weekly gains in more than a year, as reported by Bloomberg News on July 28, 2023.

West Texas Intermediate (WTI) crude broke through the psychological barrier of $80 per barrel at the end of the week on July 28, capping a rally that began at the end of June and nearly erased losses so far this year. Driving oil prices higher is restrictions on crude exports, such as Saudi Arabia, a key OPEC+ country, which has led banks, including Standard Chartered Bank and UBS, to forecast a tightening of the global balance in the coming months.

Both the spot market and financial markets are showing signs of tight supply. Inventories at a major U.S. storage hub in Cushing, Oklahoma, fell by 7.5 million barrels over the past four weeks, bringing inventories to their lowest level since May. This has supported the extension of the spot premium on WTI's two recent contracts, a bullish pricing pattern that has risen to its highest level since November last year.

With equities at yearly highs, broader risk appetite sentiment also boosted oil prices. The outlook for global demand has improved, there are signs of additional stimulus for the Asian economy, and market speculation that the Fed's interest rate hikes are nearing the end.

Despite the rise in oil prices, traders are still bracing for a possible pullback, as crude oil has been in overbought territory several times this week amid relative strength. With open interest hovering near its lowest level since January, oil prices remain volatile and prone to large swings.

Price:

West Texas Intermediate crude for September delivery in New York rose 49 cents to settle at $80.58 a barrel. It is up 4.6% for the week.

Brent crude crude settled 75 cents per barrel in September at $84.99 a barrel.

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