(Bloomberg) — Oil was little changed as the second half kicked off, with traders focused on challenges to demand and a complex supply outlook.
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Brent crude held above $75 a barrel after capping a string of four quarterly losses last week, the worst run for the global benchmark in data going back more than three decades. So far this year, prices have retreated by about 12% as China’s recovery lost steam, traders feared a potential recession in the US, and robust exports from Russia and Iran kept supplies ample.
The third quarter is regarded by many market watchers as a critical period during which the physical market could tighten. Saudi Arabia, a leader of OPEC+, which groups the Organization of Petroleum Exporting Countries and its allies, is expected to extend a unilateral 1 million barrel-a-day output cut by another month in August. That extra cut comes on top production curbs that Riyadh was already making with fellow cartel producers.
The US Department of Energy plans to solicit more oil purchases this week as part of a drive to replenish the Strategic Petroleum Reserve, which was drawn down last year amid the turmoil following Russia’s invasion of Ukraine. The US previously said it would buy 12 million barrels to help refill the reserves.
“Going into the third quarter, oil prices could remain dependent on demand concerns, but OPEC’s supply cut will start to underpin and may be extended to August,” said Charu Chanana, market strategist for Saxo Capital Markets Pte. in Singapore. “The US SPR refilling is also likely to pick up traction, and keep demand outlook supported.”
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