Supply disruptions push Brent crude prices to 11-week highs

According to Bloomberg News on July 13, 2023, the price of Brent crude, the world's benchmark crude oil, settled at an 11-week high on the day as crude supply disruptions tightened the spot market.

"This event is gaining more traction as the market has recently shifted from oversupply to undersupply," said Rebecca Babin, senior energy trader at Canadian Imperial Bank of Commerce's private treasury division. "The macro backdrop has improved, making every barrel of crude oil important."

Crude oil prices recently broke above key technical levels such as the 100-day moving average, breaking out of the narrow trading range it has been in for two months. Traders are now watching closely to see if crude futures will break above their 200-day moving averages - about $82.50 a barrel for Brent crude and about $77.30 a barrel for West Texas Intermediate - which could spark more buying.

Softening U.S. inflation has also supported commodity prices. Softer inflation has prompted optimism that the Federal Reserve's (FED) interest rate hiking cycle may be coming to an end.

Although the IEA said that due to the stumbling economies of developed countries, global oil demand growth this year will not be as fast as previously expected, but the IEA still expects global oil demand to hit a record high this year. In a separate report, OPEC expects the global oil market to be even tighter next year, with OPEC projecting a much larger demand growth value than other major forecasters.

Crude oil prices have fallen this year despite traders continuing to watch for signs of recession in the West - even as the U.S. economic outlook improves - while waiting for the recovery to pick up speed. OPEC+ oil-producing majors are cutting production to support the market. The price of the main product, Urals crude, breached the price ceiling set by the Group of Seven.

Prices:

West Texas Intermediate crude futures for August rose $1.14 to $76.89 a barrel.

Brent crude for September settled up $1.25 at $81.36 a barrel.