Oil up more than 2% in week ending July 7 over supply woes

By Firdevs Yuksel

ISTANBUL (AA) - Oil prices increased by over 2% during the week ending July 7 over tightening supplies following Saudi Arabia and Russia’s output curbs and renewed hope of a demand rebound in the US, the world's largest oil consumer.

International benchmark Brent crude traded at $76.81 per barrel at 2.29 p.m. (1127 GMT) on Friday, increasing 2.55% relative to the closing price of $74.90 a barrel on Friday last week.

Similarly, the American benchmark West Texas Intermediate (WTI) saw gains while trading at $72.09 per barrel at the same time, posting a 2.05% rise from last Friday’s session that closed at $70.64 a barrel.

Supply woes drove price increases after Saudi Arabia announced on Monday its intention to unilaterally extend its production cuts of 1 million barrels per day (bpd) through August, leaving the door open for further extensions.

Russia followed suit with an announcement of a voluntary reduction of its oil exports by 500,000 bpd in August, on top of the 700,000 bpd of cuts in place since March.

However, the increase in oil prices was curbed due to concerns about tighter monetary policy in the US and the likelihood of more aggressive Federal Reserve interest rate hikes.

Strong employment data for the labor market suggests that the US Fed may continue increasing interest rates over the remainder of the year.

Following the release of economic data from the US, market players now expect the Fed to raise interest rates by 25 basis points during its July 26 meeting.

Investors were also actively tracking economic data from China. The most recent figures indicate an insufficient rebound in the world's second-largest economy as the growth impetus fades.

Meanwhile, despite fears of rising interest rates in the US, prices are set for a second straight weekly gain based on a positive demand outlook.

US commercial crude oil inventories declined by 1.5 million barrels during the week ending June 30, according to data released by the Energy Information Administration (EIA) late Thursday. Gasoline inventories also fell by around 2.5 million barrels over the same period.

Renewed hope of a demand rebound in the world's largest oil consumer prompted upward oil price movement during the last trading session of the week.