Oil Prices Climb Amid Diesel Supply Crunch and Trade Deal Hopes

Highlights:

• Brent crude nears US$70; WTI trades above US$66 at the time of writing.
• Diesel shortages and trade optimism fuel oil market rally.
• OPEC+ to decide production levels at its August 3 meeting.

Crude Oil Rises for Second Straight Session
Oil prices extended their gains for a second consecutive day, lifted by optimism surrounding US trade negotiations and a tightening diesel supply market. Brent crude climbed toward US$70 per barrel after rising by 1% on Thursday (Friday AEST), while West Texas Intermediate (WTI) crude traded above US$66 at the time of writing. Traders were encouraged by comments from Indian Commerce Minister Piyush Goyal, who expressed confidence in a potential trade agreement with the United States ahead of the August 1 deadline. Additionally, Brazil and Mexico signalled efforts to deepen their trade relationships with the US, further fuelling positive sentiment in energy markets.

Diesel Demand Supports Crude Prices

A surge in diesel prices has also boosted the oil market, with refiners seeking out niche crude grades that produce higher diesel yields. This trend has tightened supply and pushed up premiums, helping to lift a market that has otherwise been weighed down by global oversupply. European Union restrictions on Russian fuel imports have added to the diesel crunch, according to French energy giant TotalEnergies SE (EPA: TTE), which noted that the restrictions have significantly impacted supply chains across the continent.

Outlook Remains Cautious Amid Supply Concerns

Despite the short-term rally, crude remains in a broader downtrend for the year as increased production from OPEC+ raises fears of an oversupply. The alliance of oil-producing nations is scheduled to meet on August 3 to discuss future output levels. Robert Rennie, head of commodity and carbon research at Westpac Banking Corporation (ASX: WBC), warned that as summer demand fades and supply remains high, global crude inventories could rise sharply, potentially dragging Brent prices back down to around US$60 per barrel.

Disclaimer for Kapitales Research

The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.

Customer Notice:

Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.

Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com