WTI Crude set for second straight quarter of losses on macro concerns

Key points

Futures on US West Texas Intermediate Crude Oil were set to register a 7.7% quarterly loss amid lingering concerns over global economic growth and fuel demand respectively.

Brent Futures were eyeing a fourth consecutive quarter of losses, being down 6.5%.

Persistent inflation and rising interest rates in major economies along with a sluggish post-COVID recovery in China have been a drag on oil prices over the past months.

The latest string of better-than-expected macro data prints from the United States solidified the case for more policy tightening by the Federal Reserve after a pause in June.

Federal Reserve Chair Jerome Powell on Wednesday did not rule out the possibility of a rate increase next month.

Meanwhile, European Central Bank President Christine Lagarde reinforced expectations of a ninth successive interest rate hike in July.

Still, support was drawn from the latest US inventory data showing a steep drop in oil stocks.

On the supply side, Saudi Arabia, OPEC+ largest producer, vowed earlier this month to reduce its oil output to 9 million barrels per day in July from nearly 10 million in May. Those plans came on top of a broader OPEC+ agreement to curb supply into the next year.

“Despite the announcements of two fresh rounds of cuts from OPEC+/Saudi Arabia, crude prices have largely remained below $80 a barrel as the market has been driven less by fundamentals and more by macroeconomic concerns,” HSBC analysts wrote in an investor note, cited by Reuters.

“We think this will continue to be the case for part of the summer, although the deep deficit of around 2.3 million barrels forecast for 2H23 should help to spur some upwards price momentum.”

As of 12:26 GMT on Friday WTI Crude Oil Futures for August delivery were edging up 0.11% to trade at $69.94 per barrel.

At the same time, Brent Oil Futures for September delivery were edging up 0.13% on the day to trade at $74.61 per barrel.