Brent Crude Oil Prices Rising
Brent Crude Oil holds a pivotal position in the global commodities market. It serves as a significant benchmark for oil prices in the global market. The pricing of many crude oils is often linked to the Brent Crude Oil Prices benchmark. Consequently, fluctuations in Brent Crude Oil prices wield considerable influence over oil markets across the globe.
According to Economic Times, Brent Crude Oil Prices have hit its highest price at the start of August 2023. The surge in Brent Crude Oil Prices can be attributed to several factors. This article will delve into four key reasons that are causing brent crude oil prices to be on the rise.
Trading Brent Crude Oil Futures
Due to the widespread use of Brent Crude Oil and its importance to the global market, Brent Crude Oil Futures is one of the most traded commodities futures in the world.
There are several exchanges that offer different types of Crude Oil Futures Contracts and Brent Crude Options. Traders can trade Fuel Oil Futures, Crude Oil Futures and Brent Oil Futures under Shanghai International Energy Exchange (INE), ICE Futures Singapore (ICE SG), ICE Futures Europe (IPE), and New York Mercantile Exchange (NYMEX) through Orient Futures Singapore.
Apart from Brent Crude Oil Futures, Orient Futures Singapore also offer other forms of commodities futures such as Soybean futures, Peanut Kernel Futures, and more.
Intercontinental Exchange Europe (IPE) Brent Crude Futures Contract Specifications
The Brent Crude Futures Contracts has the following specifications:
The contract size for Brent Crude Futures Contract has a minimum price fluctuation of USD $0.01 per barrel.
The last trading day is the last Business Day of the second month preceding the relevant contract month.
Contract months are for January, March, May, July, August, September, and November.
ICE Europe Trading Hours are from Monday to Friday, at these trading hours:
8:00 PM – 6:00 PM (New York Time)
Brent Crude Futures symbol: B
ICE Futures SG (ICE SG) Mini Brent Crude Futures (100BL) Contract Specifications
For traders looking to trade smaller futures contracts for Brent Crude Oil, they may look to trade ICE SG Mini Brent Crude Futures.
The ICE SG Mini Brent Crude Futures Contracts has the following specifications:
The contract size for Mini Brent Crude Futures Contract has a minimum price fluctuation of USD $0.01 per barrel.
The last trading day is the last Business Day of the second month preceding the relevant contract month.
Contract months are for January, March, May, July, August, September, and November.
ICE SG Trading Hours are from Monday to Friday, at these trading hours:
09:00 AM – 07:00 AM (Singapore Time)
Mini Brent Crude Futures symbol: BM
4 Reasons Why Brent Crude Oil Prices are Going Up
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OPEC+ New Oil Output Agreement
On April 2, the OPEC+ nations reached an agreement to further reduce crude oil production by 3.66 million barrels per day (bpd), amounting to approximately 3.7% of the world oil demand. This decision came after several member countries had already committed to individual production cuts.
The OPEC+ nations came together again on 4 June 2023, and agreed for Saudi Arabia, to further implement a significant reduction in its oil output for July.
As the largest oil producers within the group, the reduction from Saudi Arabia comes in addition to the broader agreement made by OPEC+ to limit the supply of oil until 2024. The aim is to stabilize and support oil prices, which have been experiencing a decline.
According to Reuters, the OPEC+ group not only extended the existing cuts of 3.66 million barrels per day (bpd), but also decided to reduce the overall production targets from January 2024 by an additional 1.4 million bpd. This adjustment brings the combined output target to 40.46 million bpd.
The decrease in supply could potentially lead to an increase in Brent Oil prices.
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China New Stimulus Measures
As the world's largest importer of crude oil, China's demand for Brent Crude oil plays a significant role in shaping the global oil market prices. Changes in China's economic growth and oil consumption patterns can influence the overall demand-supply dynamics in the oil market.
Due to the slow recovery of China’s economy post-COVID, the China government has implemented new Stimulus measures aimed at stimulating economic growth.
On June 13, China's central bank, the People's Bank of China (PBOC), reduced the interest rate for its one-year medium-term lending facility (MLF) loans by 10 basis points to 2.65% from the previous rate of 2.75%.
The cutting of interest rates from bank could aid to encourage more economic activities in the Chinese market. This could result in a higher demand for Brent Crude Oil, causing prices to go up.
Reuters reported that Crude oil prices have experienced an increase following China's central bank's decision to cut its benchmark loan prime rates (LPR) for the first time in 10 months in June 2023.
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Russian-Ukraine War Goes On
As the world's third-largest producer of crude oil, Russia's invasion of Ukraine has had a significant impact on the prices of Brent Crude Oil. The withdrawal of energy giants such as Shell, BP, and Exxon from Russian energy deals, coupled with the G7's sanctions imposing a ban on importing Russian oil, has led to a reduction in oil supply. This reduction in supply has the potential to drive up Brent Crude Oil prices.
According to MDPI, the price of Brent crude oil reached an eight-year high of USD 140 in March 2022, primarily due to the outbreak of the Russia-Ukraine war, which disrupted global supply chains. While some countries have sought alternative sources for Brent Crude Oil supply, the ongoing conflict between Russia and Ukraine continues to cast a significant shadow on the rise of Brent Crude Oil prices.
If the Russia-Ukraine war persists, its impact on the increase in Brent Crude Oil prices remains a critical factor that cannot be ignored.
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US Interest Rate Hike
According to Money Control, the United States Federal Reserve (FED) is anticipated to implement another round of interest rate hikes in order to bolster the strength of the US Dollar. This move by the Fed holds the potential to yield significant ramifications, particularly within the global oil market.
As a crucial factor, it is important to note that Brent Crude Oil is denominated in US dollars. Thus, any substantial strengthening of the US Dollar can exert a notable influence on Brent Crude Oil prices on a global scale. A surge in the value of the dollar relative to other currencies can result in an apparent increase in the cost of purchasing oil for countries using alternative currencies.
Start Trading With Orient Futures Singapore
Being an Overseas Intermediary of Shanghai International Energy Exchange (INE), Dalian Commodity Exchange (DCE), and Zhengzhou Commodity Exchange (ZCE), when foreign clients participate in internationalised futures contracts in these Chinese markets with us, they have direct access to trading, clearing, and settlement. Our parent company, Shanghai Orient Futures, is the largest broker in terms of aggregated volume across the five regulated exchanges in China.
Orient Futures Singapore also currently holds memberships at the Singapore Exchange (SGX), Asia Pacific Exchange (APEX), and ICE Futures Singapore (ICE SG). Starting August 2023, corporate clients can also gain access to the B3 Exchange through us.
We provide bespoke services to our professional clients, tailored to their corporate and individual needs. Our team will be there for you 24 hours on trading days to provide a one-stop portal for all your trades, with simple processes and an intuitive user interface that has low or near-to-zero latency.
