oil prices

Oil prices inched higher on Tuesday, extending gains from the prior session, supported by indications of tighter supplies and commitments by Chinese authorities to strengthen the world’s second-biggest economy, bolstering market sentiment.

At 00:07 GMT, Brent futures advanced by 7 cents to reach $82.81 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 11 cents, reaching $78.85.

Both benchmarks surged more than 2% the previous day, achieving their highest closures since April. The continuous climb in crude benchmarks has persisted for four consecutive weeks, attributed to anticipated supply reductions from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+).

In China, leaders of the second-largest economy and a major oil consumer pledged to intensify policy support to strengthen the economy further, as it continued to recover from the impacts of the COVID-19 pandemic. The emphasis was placed on boosting domestic demand.

However, the global economy faced some challenges, as bearish data emerged from the euro zone and the United States, highlighting weaknesses in these regions.

In the euro zone, business activity contracted more than anticipated in July due to declining demand in the dominant services industry and a notable fall in factory output, marking the sharpest decline since the onset of the COVID-19 pandemic, according to a survey.

Likewise, business activity in the U.S. slowed to a five-month low in July, primarily affected by decelerating growth in the service sector, as per closely monitored survey data. Despite this, falling input prices and slower hiring indicated potential progress by the Federal Reserve in its efforts to curb inflation.

Investors had already factored in quarter-point interest rate hikes from the Federal Reserve and the European Central Bank (ECB) for this week, shifting the focus to the statements of Fed Chair Jerome Powell and ECB President Christine Lagarde regarding future rate increases.

Later on Tuesday, industry data on U.S. crude inventories is expected to be released. According to four analysts polled by Reuters, the average estimation suggests that crude inventories fell by approximately 2 million barrels in the week ending on July 21.

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