Brent extends gains to fresh 10-month high

Economies.com
2023-09-18 14:10PM UTC

International benchmark Brent rose in European trade for the seventh straight session, scaling a fresh 10-month high, as markets focus on the potential of extreme shortages in the market during the fourth quarter after Saudi Arabia and Russia extended their voluntary production cuts. 

 

Prices are also boosted on hopes of improving fuel demand in China as recent data showed the economy has recovered strongly.

 

Prices Today

 

Brent rose 0.65% to $94.85 a barrel, the highest since November 2022, with a session-low at $93.98, after rising 0.2% on Friday, the sixth profit in a row, marking the longest streak of daily gains since late August.

 

Brent rose 4.25% last week, the third weekly profit in a row as markets brace for supply shortages this year.

 

Shortages 

 

The International Energy Agency said the decision by Saudi Arabia and Russia to cut crude output by 1.3 million bpd until the end of the year will cause shortages in the fourth quarter of the year.

 

Bank of America analysts believe such cuts will send Brent prices above $100 by the end of the year.

 

Conversely, OPEC maintained its optimistic outlook for demand growth worldwide this year and next year,while also expecting flexible global economic growth despite higher interest rates.

 

Chinese Demand

 

Recent strong Chinese data indicated the economy is likely recovering in the third quarter of the year and exiting the recent struggles.

 

China's industrial production rose 4.5% in August, beating estimates of 3.9%, while retail sales rose 4.6% in August, beating estimates of 3.0%, as unemployment fell to 5.2%.

 

In another stimulus step to boost the economy, the People's Bank of China decided to lower the required cash reserves held by banks by 25 basis points to nearly 7.4%.

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