World oil prices continue strong recovery

In the trading session on September 19, world oil prices extended their recent recovery and increased by more than 1% as the US Federal Reserve's decision to lower interest rates and the decrease in global oil reserves somewhat overshadowed concerns about demand due to weak consumption in China.

At the end of the session, Brent crude oil price in the North Sea increased by 1.23 USD, or 1.7%, to 74.88 USD/barrel, while US light sweet crude oil price increased by 1.04 USD, equivalent to 1.5%, to 71.95 USD/barrel.

Prices for “black gold” are recovering after Brent crude fell below $69 a barrel for the first time in nearly three years on September 10. Both crudes have recorded five gains in seven trading sessions since then.

The Fed cut interest rates by half a percentage point on September 18. Rate cuts typically boost economic activity and energy demand, but some also see the sharp rate cuts as a sign of a weak US labor market.

Analysts at UBS said falling global oil inventories would support oil prices, pushing Brent back above $80 a barrel in the coming months. Government data showed that crude inventories in the United States, the world's top oil producer, fell to a one-year low last week. Strategists at Macquarie predicted that the decline could accelerate next week, as U.S. exports are likely to rebound sharply after last week's disruptions caused by Hurricane Francine.

Citi analysts forecast a shortage of about 400,000 barrels per day in the oil market will support Brent crude prices to a range of $70-$75 per barrel in the next quarter.

Oil prices are also being boosted by rising tensions in the Middle East, said Tim Snyder, chief economist at Matador Economics.

However, weak demand from China due to a slowing economy is still capping oil's gains, said Alex Hodes, oil analyst at brokerage StoneX. Recent data showed China's refinery output growth slowed for the fifth consecutive month in August. China's industrial output also recorded its slowest growth in five months in August, and retail sales and new home prices continued to decline.

According to VNA

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