Oil prices stabilized on Thursday after two days of declines, including a steep dip on Wednesday. The U.S. government’s credit rating drop lowered optimism, but supply shortages helped.
Fitch downgraded the U.S.’s long-term foreign currency grades. The U.S. uses the most oil. Therefore, this was horrible. Concerns about the U.S. dollar’s overseas status and the economy’s predicted collapse caused the decrease.
Despite pessimism, oil prices rose due to supply concerns. On Friday, major manufacturers will likely discuss lowering output.
Brent oil rose 4 cents to $83.24 a barrel at 04:22 GMT, while U.S. West Texas Intermediate crude rose 0.1% to $79.53.
After the credit rating reduction, both standards slid 2% from their April highs. WTI and Brent rose almost 14% in July.
Oil had been rising continuously for a month, so a drop seemed inevitable. An OANDA specialist, Edward Moya, said oil might fall much more.
Last week, U.S. oil stockpiles plummeted a record 17 million barrels, illustrating the supply crisis. Due to oil refiners operating more and exports exceeding 5 million barrels daily (bpd), global demand is more significant than supply since large producers are still pulling down.
The OPEC+ market monitoring group meets on August 4. Reuters reports that OPEC+ will likely keep pumping oil. Saudi Arabia may continue voluntarily decreasing oil output by 1 million bpd in September.
Government attempts to boost China’s economy, the world’s second-largest oil consumer, simultaneously boost oil prices and demand. China reported Thursday that its services sector increased more than predicted in June. This offset industry news earlier in the week.
CMC Markets researcher Tina Teng believes China’s ongoing backing and the significant decline in U.S. inventories are driving the oil market higher again.