Crude oil prices fall in early trade

10 Jul 2023 , 12:14 PM

Early Asian trading on Monday saw a decline in oil prices as investors exercised caution ahead of this week’s release of new economic data from top users China and the United States, but the market was supported by anticipated reductions in crude supply from Saudi Arabia and Russia.

Brent crude futures were down 22 cents, or 0.3%, to $78.25 per barrel, while U.S. West Texas Intermediate crude was down 29 cents, or 0.4%, to $73.57 per barrel.

Following commitments from the world’s two largest oil exporters, Saudi Arabia and Russia, to intensify production curbs in August, both benchmarks increased by more than 4% last week to reach their highest levels since May.

In August, Saudi Arabia will continue to cut its output by 1 million barrels per day (bpd), and Russia will reduce its oil shipments by 500,000 bpd. Russia would use the crude to make extra fuel to meet domestic demand rather than reducing supply, a government source told Reuters on Friday.

According to data from oil analytics firm, Vortexa, Saudi Arabia’s cuts are reducing its oil oversupply as floating storage off the Egyptian Red Sea port of Ain Sukhna is dropped by almost half to 10.5 million barrels from mid-June.

Iran’s last-week detention of a supertanker operated by American energy giant Chevron in the Gulf has sparked worries about the danger it poses to transportation throughout the area, especially through the Strait of Hormuz.

The U.S. Federal Reserve will probably continue on course to raise interest rates at the forthcoming July meeting as evidenced by Friday’s data showing still-strong wage growth and a modest decline in the unemployment rate this week.

The U.S. Commodity Futures Trading Commission (CFTC) reported on Friday that money managers increased their net long positions in U.S. crude futures and options during the week ending July 3.

According to a Baker Hughes report released on Friday, the number of U.S. oil rigs dropped by five to 540 last week, the lowest level since April 2022.

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