Copy of 2023-07-26T193314Z_1809971969_RC26B2AW7N9F_RTRMADP_3_UKRAINE-CRISIS-OIL-USA-1690450528923
Coming into focus is an August 4 meeting of key OPEC+ ministers to review the market. Image Credit: REUTERS

London: Oil climbed almost 1 per cent on Thursday, recouping losses from the previous session, supported by supply tightness owing to OPEC+ production cuts and renewed optimism on the outlook for Chinese demand and global growth.

Crude has posted four consecutive weekly gains on an expected tightening of supply because of output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, as well as some involuntary outages.

Brent crude advanced 64 cents, or 0.8 per cent, to $83.56 a barrel by 0820 GMT while US West Texas Intermediate (WTI) crude rose 74 cents, or 0.9 per cent, to $79.52. Intra-day peaks for both contracts were near their highest since April 19.

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“We see the oil market undersupplied,” UBS analysts said in a report. “We retain a positive outlook and look for Brent to rise to $8590 over the coming months.” Oil prices dropped on Wednesday after data showed US crude inventories fell less than expected and the US Federal Reserve raised interest rates by a quarter of a percentage point, leaving the door open to another increase.

Still, Asian shares jumped to five-month highs on Thursday on hopes that the US tightening cycle was over and the economy was heading for a soft landing, boosting the outlook for global growth and risk appetite.

The European Central Bank, also viewed as approaching the end of its tightening campaign, is expected to raise interest rates for the ninth time in a row on Thursday.

A pledge on Monday from China to boost policy support for the economy is continuing to underpin sentiment.

“The Chinese authorities have signalled to step up support measures to revive the ailing Chinese economy, which in turn has spurred hopes of oil demand regeneration from the world’s largest importer of crude oil,” Phillip Nova analyst Priyanka Sachdeva said in a note.