Oil markets rose on the second trading day of the week, driven by Saudi Arabian output cuts and China’s efforts to support the indebted real estate sector. As of 9:00 am, the international benchmark Brent crude oil was traded at $77.88 with an increase of 0.21%, while the intraday high was 78.04, slightly above $78. The US benchmark West Texas (WTI) crude oil is trading at $73.34 per barrel.
As China is a major source of crude oil demand, it raised stimulus hopes Monday by expanding support measures for the indebted real estate sector. However, China’s faltering economic recovery is putting pressure on oil prices.
Saudi Arabia, the leader and largest producer of OPEC, announced last week that it will extend the 1 million barrels per day production cut until at least August. In addition, Russia announced that it will cut production by 500,000 barrels next month.
JPMorgan: Supply Outage Must Continue
US-based investment bank JP Morgan says OPEC+ needs to deepen cuts to offset growth in non-OPEC supply. The investment bank states that 0.7 million barrels of reduction in daily crude oil production in the second half of this year is necessary to ensure the balance between supply and demand and to stabilize prices.
Also, JP Morgan thinks OPEC+ should extend the cuts until 2024 to offset the increased output of some smaller OPEC member countries in addition to the announced output cuts.
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