Oil rises as markets focus on tightening supplies, China stimulus package

By Sibel Morrow

ANKARA (AA) - Oil prices climbed on Tuesday over fears of tightening global supply as the August output cuts of OPEC+ oil-producing countries approach, coupled with anticipation of more Chinese economic stimulus.

International benchmark Brent crude traded at $82.65 per barrel at 10.08 a.m. local time (0708 GMT), a 0.20% gain from the closing price on Monday of $82.48 a barrel.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $78.98 per barrel, up 0.30% from the session close of $78.74 per barrel on Monday.

Brent oil gained almost 1.8% on Monday, and both benchmarks continued their rally in early Asian trade on mounting fears of a tighter market before OPEC+’s latest production cutbacks, led by Russia and Saudi Arabia, take effect on Aug. 1.

Russia, Saudi Arabia, and Algeria agreed on new cuts in July, in addition to the OPEC+ group's already planned output caps of about 2 million barrels per day (bpd) in October 2022 and 1.6 million bpd in May.

Russia said it would reduce oil exports by 500,000 barrels per day (bpd) in August to ensure market stability.

Its decision came on the same day that Saudi Arabia and Algeria said they would cut output by 1 million bpd and 20,000 bpd, respectively.

Prices are falling due to concerns about limited supply and the deterioration of global economies as a result of inflation and rising interest rates.

In response to emerging bearish data, China, the world's top oil-importing country, is poised to issue a stimulus plan to boost its economy.

In his address at a meeting of members of the Communist Party of China (CPC) and non-CPC parties in Beijing on Monday, China’s President Xi Jinping stressed the need to deepen reforms, enhance macro regulation, boost domestic demand and mitigate risks while promoting economic performance, endogenous growth and social stability.

He recommended that these aims be carried out by implementing a "new development philosophy across all sectors" at a time when the country is witnessing sluggish growth.

According to the most recent economic figures given by Beijing, China's economy grew 6.3% less than expected in the second quarter.

Investors are now focused on the US Federal Reserve's (Fed) decision. The two-day meeting will begin later on Tuesday. The Fed is largely expected to raise interest rates by 0.25 point, marking the central bank's 11th rate increase in just 18 months.