Oil rises amid tight supplies and China’s pledge to support its economy

Oil prices rose on Tuesday, extending the gains made in the previous session, as signs of declining supplies and the Chinese authorities’ pledge to support the world’s second largest economy lifted sentiment.

Brent crude futures rose seven cents to $82.81 a barrel at 00:07 GMT, while US West Texas Intermediate crude rose 11 cents to $78.85.

Both benchmarks rose more than 2% in the previous day, reaching their highest closes since April.

They have already climbed for four consecutive weeks, with expectations of tighter supplies due to production cuts announced by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+.

In China, the world’s second largest oil consumer, leaders pledged to intensify policies to support the economy amid a shaky post-COVID-19 recovery, with a focus on boosting domestic demand.

However, disappointing data in the Eurozone and the US confirmed weakness across the global economy.

A survey showed that business activity in the eurozone contracted much more than expected in July, with demand falling in the bloc’s dominant service industry, while factory output fell at the fastest pace since the onset of COVID-19.

In the United States, business activity slowed to a five-month low in July, dragged down by slower services sector growth.

Later on Tuesday, industrial data on US crude inventories will be released. Four analysts polled by Reuters estimated, on average, that crude stocks fell by about 2 million barrels in the week ending July 21.