Oil prices were up slightly in Asian trading early on Friday and set for a small weekly gain, the fourth in a row, as the market is starting to see signs of tightening supply.
However, gains have been limited, after China reported early this week second-quarter GDP growth below expectations.
But the market is now more optimistic that China will roll out more stimulus to support domestic demand and help its economy which has struggled to rebound strongly after the end of the Covid lockdowns more than six months ago. China vowed on Tuesday that it would “formulate and introduce more effective policies for restoring and expanding consumption as soon as possible.”
This pledge has improved sentiment across the commodity markets.
While the economic data from China and the U.S. remain mixed, the fundamentals are increasingly pointing to a tighter oil market this summer.
Russian crude oil exports have shown signs of decline for a second consecutive week and are estimated to have sunk to a six-month low in the four weeks to July 16. Russia is preparing to cut 500,000 barrels per day (bpd) off its oil exports in August, and shipping plans so far suggest that Russia could deliver on at least part of its pledge to reduce oil exports next month.
Saudi Arabia’s crude oil exports have also started to decline, to below 7 million bpd in May, for the first time in many months. Crude shipments out of the world’s top exporter could further decline as Saudi Arabia is now cutting its production by 1 million bpd in July and August.
In the United States, crude oil and gasoline inventories dropped last week, the EIA’s weekly data showed on Wednesday.
By Tsvetana Paraskova for Oilprice.com
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