Crude Oil Prices Witness Slim Surge Amidst Production Curbs by OPEC+ countries and Russia

During early Asian trade on Thursday, oil prices showed a rather steady performance despite the potential of tightened supply from OPEC+ and Russia's output cuts, along with a larger-than-anticipated decline in U.S. crude stocks.

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However, concerns over China's slow demand recovery restricted any potential price hikes. According to the American Petroleum Institute, U.S. crude stocks tumbles by 4.4 million barrels during the week ended June 30th, surpassing industry analysts' expectations. Despite trading at two-week highs, oil prices have declined by 10% this year due to China's languorous economic recovery after lifting pandemic restrictions, macroeconomic challenges, and central banks' interest rate hikes.

China's efforts to boost its economy continue to face obstacles, as demonstrated by the Caixin services PMI missing the June estimates. The API inventory report may have contributed to supporting the oil prices by showing a decline of 4.382 million barrels for the week ended June 30th, following a drop of 2.4 million barrels the preceding week.

Furthermore, the RBOB crack spread, a measure of the profitability of refining gasoline in comparison to crude oil prices, has recently experienced a decrease after an attempted increase last month. RBOB, an acronym for reformulated blend stock for oxygenate blending, refers to a particular type of gasoline that can be traded. If refiners' profitability continues to decline, this may reduce demand for crude oil. Currently, the RBOB crack spread is not excessively profitable or unprofitable for refiners.

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According to Procurement Resource, the production cut by OPEC+ has led to improved crude oil prices. China has shown slight demand recovery, but obstacles to boosting their economy have caused oil prices to decline by 10% this year, despite trading at two-week highs.