Investing.com — Crude oil prices rose Monday, as expectations of tightening supply in the second half of the year overshadowed the likelihood of further tightening from the Federal Reserve and the European Central Bank.
By 09:05 ET (13:05 GMT), the futures traded 1.1% higher at $77.91 a barrel, while the Brent contract climbed 0.7% to $81.47.
Production cuts help sentiment
The crude market has been on the up lately, boosted by the announcement earlier this month that Saudi Arabia and Russia, the world’s biggest oil exporters, will deepen oil production cuts, starting in August, in an attempt to boost crude prices.
The two benchmarks rose around 2% last week, their fourth straight week of gains, and have started the new week on a positive note.
Additional Chinese stimulus likely
Also helping sentiment has been growing expectations that top oil importer China would roll out fresh stimulus measures to help revive flagging growth, especially after comments from the Politburo, a top decision-making body of the ruling Communist Party, earlier Monday.
The Chinese leaders pledged to “intensify macroeconomic policy adjustments, focus on expanding domestic demand, boosting confidence and preventing risks, and continuously promote the improvement of economic operations,” according to the Xinhua agency.
Goldman sees Brent at $86/bbl by year-end
Increasing demand from China is expected to result in record demand this year, with the forecasting in June that global oil demand would rise by 2.4 million barrels per day in 2023, outpacing the previous year’s 2.3M barrel per day increase.
“We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in the third quarter as demand reaches an all-time high,” Goldman’s head of oil research Daan Struyven said on CNBC earlier Monday.
Goldman also noted that reported last week that U.S. oil rigs fell by 7 to 530, the lowest since March 2022, hitting supply in the largest consumer in the world.
The influential investment bank forecasts to rise to $86 per barrel by year-end, a gain of around 6% from the current levels.
G20 fail to agree on cutting fossil fuels
Also boosting sentiment was the news that the Group of 20 major economies failed to reach consensus over the weekend on phasing down fossil fuels.
These countries together account for over three-quarters of global emissions and gross domestic product, and a cumulative effort by the group to decarbonise would be necessary in the global fight against climate change.
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