Oil Updates crude heads for first monthly gain this year as sgupply tihtens

 After settling marginally higher on Thursday, both benchmarks were on track to climb more than 2.5 percent for June. While it would be Brent’s first monthly gain for 2023, it would mark a second for WTI after a gain in April.

Despite the probably monthly gain, on a quarterly basis, Brent looks set for a loss of around 6 percent 

Markets are worried about tightening supply after the US Energy Information Administration said crude inventories dropped by 9.6 million barrels in the week ended June 23, far exceeding the 1.8-million-barrel draw analysts had forecast in a Reuters pollMeanwhile, US gross domestic product in the first quarter was revised up to a 2.0 percent annualized rate from the 1.3 percent pace reported previously.

“A significant upward revision (of US GDP data) adds to the list of positive economic surprises in the US lately, with economic resilience aiding to calm some nerves around recession concerns, at least for now,” Yeap Jun Rong, market analyst at IG, said in a note to clients.

The strong US economic data and oil stock drawdown comes at a time when Saudi Arabia is planning to further cut output by 1 million barrels per day in July. That’s in addition to a broader deal by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to limit supply into 2024.

Refinitiv data showed Russia’s seaborne oil exports from Primorsk, Ust-Luga and Novorossiisk will fall to 1.9 million barrels per day in July from 2.3 million bpd in June as domestic refineries increase runs, which could further tighten global crude oil supply.

The oil price gains on Friday were, however, capped by weak Chinese economic data and fears of interest rate hikes.

China’s manufacturing activity contracted for a third straight month in June, albeit at a slower pace, an official factory survey showed on Friday. Non-manufacturing activity also also fell in June.

The data was largely in line with analysts’ forecasts.

“It was not much of a surprise to see ... though perhaps the fact that the contraction is relatively stable is a source of some comfort. At least things aren’t getting noticeably worse,” Robert Carnell, regional head of research at ING, said in a note.

In the US, the Federal Reserve is likely to resume its rate-hike campaign after a break earlier this month, its chairman Jerome Powell signaled on Thursday after a fresh slew of stronger-than-expected economic data.