Pre Open US - US Oil 25 July 2023

There are signs of supply tightening that have been bolstering prices, primarily attributed to the output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allied producers, which are now coming into effect. In July, Russia's exports reached a six-month low, and ship tracking data suggests reduced shipments from OPEC producers.

Moreover, the bank reported that refinery profitability has reached its highest level since March, thanks to increased demand during the summer driving season.

In China, the world's second-largest oil consumer, leaders have made commitments to enhance economic policy support. However, there has been a contraction in business activity in the Eurozone, which exceeded expectations in July, as per a survey.

Regarding the United States, a closely watched survey indicated that business activity had slowed to a five-month low in July. However, the survey also showed that input prices were declining, and hiring was slowing down, suggesting that the Federal Reserve might be making progress in its efforts to control inflation. Market expectations during that week indicated 25-basis-point rate hikes from both the Federal Reserve and the European Central Bank.

WTI crude oil has reached the resistance level at $79 and is currently undergoing correction. The next potential support level might be the previous resistance at $77. The overall trend appears to be healthy and positive, with a potential target of $80 seeming feasible.