RIYADH: Oil prices traded up on Tuesday, recovering some ground from the previous day’s plunge, but gains were limited as investors remained cautious ahead of key policy decisions by the US Federal Reserve and other central banks.
Brent crude futures climbed 65 cents, or 0.90 percent, to $72.49 a barrel by 9:46 a.m. Saudi time. US West Texas Intermediate crude was at $67.62 a barrel, up 50 cents, or 0.74 percent.
Both benchmarks fell around $3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of key inflation data and a two-day Fed monetary policy meeting set to conclude on Wednesday.
Most market participants expect the US central bank to leave interest rates unchanged at its policy meeting. The Fed’s rate hikes have strengthened the greenback, making dollar-denominated commodities more expensive for holders of other currencies and weighing on prices.
In China, disappointing economic data last week raised concerns about demand growth in the world’s largest crude importing country, offsetting a boost in prices from Saudi Arabia’s pledge to cut an extra 1 million barrels per day of production in July.
US oil output to rise to record high in July but growth narrowing: EIA
US oil output from top shale-producing regions is due to rise to the highest on record in July, but the size of the increase is expected to be the smallest since December, US Energy Information Administration data showed on Monday.
US oil output is expected to rise to 9.38 million bpd in July, EIA data showed — a rise of about 0.1 percent versus the previous month, which would be the smallest monthly gain since production was seen falling in December, the data showed.
Crude output in the Permian Basin in Texas and New Mexico, the biggest US shale oil basin, is expected to rise by 1,000 bpd to a record-high 5.76 million bpd. That would be the smallest monthly increase for the region since February.
In the Bakken region of North Dakota and Montana, output is due to rise 7,000 bpd to 1.21 million bpd, which would be the highest since November 2020.
Crude oil production in the South Texas Eagle Ford region is due to fall by 5,000 bpd to 1.12 million bpd, the lowest level since April, EIA added.
Total natural gas output in the big shale basins will increase by about 0.1 billion cubic feet per day to 97.3 bcfd in July, topping an expected record high in June, the EIA projected.
Pakistan paid in Chinese currency for discounted Russian oil, minister says
Pakistan paid for its first government-to-government import of discounted Russian crude oil in Chinese currency, the South Asian country’s petroleum minister said on Monday, a significant shift in its US dollar-dominated export payments policy.
Discounted crude offers a respite as Pakistan faces an economic crisis with an acute balance of payments problem, risking a default on its external debt. The foreign exchange reserves held by its central bank are scarcely enough to cover a month of controlled imports.
Speaking to Reuters, Petroleum Minister Musadik Malik did not disclose the commercial details of the deal, including pricing or the discount that Pakistan received, but said, the “payment (was) made in RMB (Renminbi).”
The first cargo of discounted Russian crude oil arranged under a deal struck between Islamabad and Moscow earlier this year arrived in Karachi on Sunday. It is currently being offloaded at the port in the southern city of Karachi.
The minister said the purchase, Pakistan’s first government-to-government deal with Russia, consisted of 100,000 tons, of which 45,000 tons had docked at Karachi port and the rest was on its way. Pakistan made the purchase back in April.