Oil prices added solid gains on the last working day of the week thanks to the overall positive sentiment among investors.
Specifically, in the afternoon trades on the NYMEX, WTI crude oil futures for September delivery were trading at $76.06 per barrel, indicating a 0.54% increase compared to the closing value of the previous trading day. Similarly, Brent crude oil futures for September delivery rose by 0.57%, reaching $80.12.
Throughout the week, oil prices have been under pressure due to the uncertain demand outlook and hopeful expectations regarding supply. However, it seems that oil is poised to settle higher for the fourth consecutive week.
The US dollar index, that track the value of the American currency against a basket of six major currencies, also gained 0.25% and was trading at 101.13 at the time of writing.
Earlier this week, oil prices surged following news of reduced oil supplies from Russia. The country's seaborne crude oil exports remained at 450,000 barrels per day, significantly below the June average. Taking into account the anticipated production cut of 500,000 barrels per day in August, it is expected that these levels will persist in the coming weeks. Russia's total crude oil deliveries to the global market amounted to 3.1 million barrels per day.
In light of the anti-Russian sanctions, it's worth noting where Russia is sending its oil barrels. Geographically, 90% of the volumes are directed to India and China, with Turkey and Bulgaria being willing buyers of the remaining portion.
Undoubtedly, the reduction of Russian oil supplied to the global market has a favorable impact on oil prices. When Gazprom cuts production by 500,000 barrels per day, 0.5% of the supply will automatically be taken off the world market. Lower supply levels will lead to higher prices.
Optimistic statistics on oil reserves in the US, as reported by the American Petroleum Institute (API), also played a significant role in supporting oil prices. The API stated that last week, crude oil inventories in the world's largest economy declined by 0.8 million barrels, and gasoline and distillate stocks also decreased by 2 million and 0.1 million barrels, respectively. This data made a very positive impression, indicating strong demand for oil in the US.
In addition to this, comments from Chinese officials (one of the world's largest oil importers) supporting efforts to increase consumption also boosted oil prices. In response, the Fitch Ratings agency recently stated that China's GDP growth this year will exceed the government's target of 5%, reaching 5.6%.
Next week, the US Federal Reserve will hold a meeting where plans for interest rates in the country will be announced. According to the CME Group, the vast majority of analysts (99.8%) expect that the regulator will raise the rate by 25 basis points, resulting in an interest rate level of 5.25-5.5% in the United States.
