Oil Holds Gain on Signs Russian Crude Flows Starting to Decline

(Bloomberg) -- Brent oil steadied after rising around 2% on Tuesday on signs that Russian crude production may be finally starting to decline.

Futures in London traded near $80 a barrel, a threshold that was last breached in early May. Vessel tracking data showed shipments through Russia’s western ports in the four weeks to July 9 dropped substantially, more than four months after the OPEC+ producer was due to slash output.

A weaker dollar also provided some support to commodities as investors wait for the US consumer price index read later Wednesday for clues on the path forward for monetary tightening from the Federal Reserve. Aggressive interest-rate hikes this year have weighed on the energy demand outlook.

Oil remains marginally lower this year, but OPEC+ heavyweights Saudi Arabia and Russia have pledged supply cuts to prop up prices. The global market is expected to tighten in the second half and stockpiles are forecast to draw through 2024, according to an Energy Information Administration report.

“A break above the key $80 level ahead may pave the way for a retest of its year-to-date high,” said Yeap Jun Rong, a market strategist for IG Asia Pte. Global benchmark Brent momentarily breached $89 a barrel in late January. 

The EIA will release its weekly report on US crude stockpiles later Wednesday. The industry-funded American Petroleum Institute reported inventories rose by 3 million barrels last week, according to people familiar with the data. Traders will also be watching monthly reports on Thursday from the International Energy Agency and OPEC for snapshots of the global oil market.

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