Commodities Week Ahead: After July, OPEC Will Fight to Keep Oil Up

investing.com:

Scoring the biggest gain for oil in 18 months is one thing; keeping it going is another. That’s what OPEC will attempt this week as the world’s biggest crude producers sit again to strategize how to manipulate the market their way, as top importer China continues to show signs of economic weakness.

With U.S. West Texas Intermediate, or WTI, hovering at $80 per barrel at the time of writing — and Brent at $84 — crude futures were poised to deliver an average return of 13% in July for longs in the game, after five straight weeks of gains. That was the largest monthly win for the two crude benchmarks since January 2022, when they rose by an average 17%.

But OPEC, or the Organization of the Petroleum Exporting Countries, has more on its hands as August dawns amid extended worries about demand out of China.

Data on Monday showed that Chinese manufacturing activity shrank for a fourth straight month in July, while broader business activity also deteriorated as oil’s biggest buyer struggled with a slowing post-COVID economic recovery.

How well the Federal Reserve does in keeping a lid on inflation will also matter to the 13-member Saudi-led OPEC and its extended OPEC+ group that includes 10 other oil-producing allies steered by Russia.

From a four-decade high of 9% in June 2022, the Fed has managed to bring inflation, measured by the Consumer Price Index, to just 3% per annum in June this year. But the success came with a big price: The raising of interest rates by 525 basis points in just 18 months to smother the runaway inflation caused by the trillions of dollars of pandemic relief spending by the government.

To keep inflation down, the Fed needs to keep a lid on U.S. jobs and wage growth. On Friday, the central bank will