Pre Open US - US Oil 21 Aug 2023

Oil prices inched up on Monday due to reduced exports from Saudi Arabia and Russia, along with elevated heating oil prices, which overshadowed concerns about global demand growth amid high-interest rates. The September WTI contract is set to expire on Tuesday, while the more active October contract saw an increase of 78 cents, reaching $81.44 per barrel. After a 7-week winning streak, both front-month benchmark prices experienced a 2% weekly loss last week, driven by worries that China's sluggish economic growth could negatively impact oil demand and uncertainties surrounding the potential continuation of the U.S. interest rate hike cycle. Despite China's economic challenges, the country is utilizing its record inventories built up earlier this year, as refiners reduce purchases following supply reductions by OPEC and its allies, collectively known as OPEC+. These supply cuts pushed global prices above $80 a barrel. Nevertheless, Saudi Arabia's July shipments to China decreased by 31% compared to June, while Russia, thanks to its discounted crude, remained China's primary supplier, as indicated by Chinese customs data.

WTI price action found support and is currently undergoing a correction from the expected level of 78.7. The next level to watch for will be the challenge of the previous high at 85.