On Wednesday, the price of oil benchmark Brent slipped down as worries about a slowing global economy eclipsed production reductions that were announced this week by major crude exporters Saudi Arabia and Russia.
After increasing by $1.60 on Tuesday, Brent crude was down 64 cents, or 0.8%, at $75.61 a barrel at 0913 GMT.
The price of U.S. West Texas Intermediate oil increased by 92 cents, or 1.3%, from Monday’s closing to $70.71. Due to the holiday on Tuesday, there was no settlement; thus, trading on Wednesday seemed to reduce the gap between the benchmarks, with WTI outpacing Brent’s advances from the previous day.
Recent business surveys have revealed a decline in industrial activity globally, which reflects weak demand in China and Europe.
According to a private sector survey released on Wednesday, China’s services industry increased in June at its weakest rate in five months as the momentum of the post-pandemic rebound was slowed by waning demand.
The largest supplier of crude oil in the world, Saudi Arabia, said on Monday that it will prolong its voluntary output reduction of 1 million barrels per day (bpd) until August. While this is going on, Russia and Algeria are decreasing their output and export levels for August by 500,000 bpd and 20,000 bpd, respectively.
Interest rates are another topic of discussion since U.S. and European central banks are anticipated to raise rates further in order to combat persistently rising inflation.
The Federal Open Market Committee (FOMC) meeting minutes from June 13–14 will be released later on Wednesday, and the market is anticipating them for more hints about the outlook of the US central bank.
Additionally, traders will be looking for demand hints in government data released on Thursday and industry data on U.S. crude and product stocks released by the American Petroleum Institute on Wednesday, both of which were delayed by a day due to the U.S. holiday.