Oil prices have been slowly moving higher in recent weeks as bullish sentiment begins to build on the back of Saudi Arabia’s supply cut and Russia’s pledge to cut its oil exports, OilPrice said.

Oil prices have marginally moved beyond the $72-77 per barrel range for Brent and $67-72 per barrel for WTI, and there is a growing sense that the market is starting to feel Saudi Arabia’s production cuts and Russia’s export curbs. Hedge fund net positioning in the ICE Brent contract went up by the equivalent of 25 MMbbls last week, the largest week-on-week build in two months, pointing at a potential short-term pricing upside. 

UAE refuses to commit to voluntary cuts.As Saudi Arabia extended its 1 million b/d production cut into August and is widely expected to do the same into September, the United Arab Emirates announced it would not join its OPEC peer and that Riyadh’s cuts are enough to balance markets. Iran accuses US of shielding fuel smugglers. Less than a week has passed since Iran tried to intercept a US-bound tanker chartered by Chevron, Tehran now accused the US Navy of defending fuel smuggling in the Gulf as another tanker was seized despite US aircraft interference. Venezuela’s opposition wants to redraw export map.Venezuela’s opposition is now suggesting that the Latin American country should redirect 200,000 b/d of its exports to a selected trustee to pay a group of creditors, as Caracas fights tooth and nail to retain Citgo as its key asset. Mexican oil disaster hard to contain.Mexico’s national oil company Pemex estimates that the fire that broke out at its Nohoch-A platform and spread to the strategic Cantarell compression complex – causing the death of three people in the process – has led to the loss of 700,000 barrels of crude oil production so far. 

China’s attempts to boost domestic industrial production are increasingly showing the limits of government stimulus despite international agencies such as OPEC or IEA continuing to bet on strong Chinese demand growth in H2 2023. The year-on-year growth of broad money, known as M2 supply, has risen to 11.6% in most recent data readings, the highest since 2016, but China’s PPI index has been falling for 11 months in a row, indicating the stimulus is not really boosting industrial production. Hamstrung by a youth unemployment rate of 20.8% and declining property prices that exacerbate the pains of the construction sector, China’s economy must rely on industrial exports which are also turning negative as buyers across the Atlantic Basin confront their own recessionary concerns. The combination of a flat CPI index and falling PPI, aggravated by an ailing property sector and little external help from exports, have been hindering the commodity impact of China’s fiscal stimulus.