Oil headed for its biggest monthly gain in more than a year as OPEC+ cuts production, amid record-breaking forecasts for crude oil demand and signs of market tightening.
US crude held above $80 a barrel after a five-week streak that pushed prices to their highest level since April. The US crude gauge has risen almost 14 percent this month, putting it on its largest course of progress since January 2022. This is the best performance of July in almost two decades.
“Record demand and Saudi supply cuts have brought back deficits. Market growth has given pessimism,” said Goldman Sachs analysts, including Daan Struyven and Yulia Zhestkova Grigsby, in a note reaffirming their forecast for Brent oil to be $86 a barrel by December. .
A slew of advances in oil means that New York futures have wiped out losses since the start of the year, and expectations that the Fed is close to ending its monetary tightening cycle are also helping the rally as the dollar weakens. U.S. jobs data, due this week, likely point to a healthy demand outlook, while China’s largest importer continues with stimulus to boost its economy.
Decreasing supplies from OPEC+ cornerstones Saudi Arabia and Russia improved the outlook for crude oil. Earlier this month, Deputy Prime Minister Alexander Novak said Russia will cut crude oil exports by 500,000 barrels a day in August, and Saudi Arabia will extend supply cuts next month.
Data from China showed that manufacturing contracted for the fourth month in July, while non-manufacturing grew more slowly than expected.