Crude Prices Surge As Supply Concerns Continue Unabated

Crude prices surged more than 2 percent in overnight trading amidst continuing concern over the supply position. The recent massive decline in crude oil inventories in the U.S. and the perception that the OPEC+ would not agree for an output boost drove prices of the black fluid higher.

Data released by the Energy Information Agency on Wednesday had shown the crude oil stocks in the U.S. falling by 4.5 million barrels in the week ended July 22, far above the expectations of a 1-million-barrel drop. The decline in inventory in the previous week was just 0.5 million barrels.

Also shaping the sentiment around oil prices is the OPEC+ meeting scheduled for the next week and speculation whether it would respond to the U.S. requests for a supply boost. Analysts also opine that the difficulties experienced by many oil producers in meeting existing output targets could also hinder the OPEC+ from agreeing to an output hike in September.

Also supporting the bullish momentum on Dollar denominated oil prices is the general weakness in the greenback. The Dollar Index which measures the Dollar against a basket of six currencies weakened below the 106 level. Demand for the safe-haven currency dropped amidst strong expectations that the Fed would have to go slow on interest rate hikes, given the U.S. economy witnessing GDP contraction for the second quarter in a row.

Brent Oil Futures for October settlement is currently trading at $104.06, up 2.19 percent from Thursday’s close of $101.83. The day’s trade ranged between a high of $104.40 and a low of $100.97.

West Texas Intermediate Crude Oil Futures for September settlement on Friday traded between a high of $99.00 and a low of $96.41. It is currently trading at $98.59, having increased 2.25 percent from Thursday’s close of $96.42.

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