Oil rises as market weighs supply cuts against gloomy economic outlook

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Oil prices rose as markets weighed supply cuts for August by top exporters Saudi Arabia and Russia against the backdrop of an uncertain global economic outlook. | Reuters

However, oil benchmarks settled down about 1 percent in the previous session, after an initial rally, on the back of a gloomy macroeconomic outlook.

Business surveys have shown a slump in global factory activity because of sluggish demand in China and Europe and U.S. manufacturing also fell further in June – reaching levels last seen in the initial wave of the COVID-19 pandemic. This broader uncertainty will likely overshadow the OPEC+ effort to tighten supply, some analysts said.

Combined with expectations of higher U.S. interest rates and fears that the U.S. will join the EU in recession, this will continue to weigh on markets, Eurasia Group analysts said. Despite the best efforts of Saudi Arabia and Russia, said Naeem Aslam, chief investment officer at Zaye Capital Markets, “the days may be over for oil prices to jump back above the 90 price mark, and the prices are more likely to consolidate between the 65 and 70 price ranges.”Your subscription could not be saved. Please try again.

 

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