Oil prices hold steady amid demand fears, tighter supply

July 03, 2023 (MLN): Oil prices remained relatively stable on Monday amid global economic concerns, possible interest rate hikes from U.S. Federal Reserve, and supply cuts from OPEC+.

Brent crude is currently trading at $75.07 per barrel, up by 0.03% on the day.

While West Texas Intermediate crude (WTI) is trading at $70.41 per barrel, up by 0.01% on the day.

Oil prices surged over 4% in June, halting seven months of predominantly declining trajectory.

However, fears of a further slowdown hurting fuel demand grew after data on Friday showed U.S. inflation still outpacing the central bank's 2% target and stoked expectations it would hike interest rates again, as Reuters reported.

National Australia Bank analysts said in a note that hawkish commentary on rates continues to raise concerns about the demand outlook weighing on prices.

Rising interest rates could appreciate the dollar-denominated index (DXY), making commodities more expensive for holders of other currencies, hence reducing oil demand.

Some analysts project that Saudi Arabia’s decision to slash oil output by 1 million barrels per day in July would continue to push prices higher.

However, China, the world's largest crude importer witnessed slowed factory activity growth as sentiment and recruitment cooled on the back of sluggish market conditions.

Moreover, Market participants await a conference later this week hosted by the Organization of the Petroleum Exporting Countries (OPEC) for directions on supply.

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