Commodities: Oil industry news

Oil prices increased on Tuesday. The price of West Texas Intermediate (WTI) crude oil rose by 44 cents to 57.31 a barrel. Another benchmark which is Brent crude oil also increased by 56 cents to $64.27 a barrel by 09:06 GMT. During this month the price of Brent oil decreased by more than 3% whereas WTI crude oil price fell by 1.8%. The two-day meeting of the Federal Open Market Committee (FOMC) starts today on July 30. This meeting will affect the oil prices and oil industry in general. Another important event which will take place on Tuesday is the meeting of U.S. and Chinese officials in Shanghai. The energy giant BP released the quarterly results which exceed the expectations.

The oil industry and Federal Reserve

Oil prices are on the rise. On Tuesday oil prices increased for the fourth day in a row. There are several reasons which influenced the oil industry. There are two important meetings which start on July 30. As mentioned above, the FOMC meeting is one of the most anticipated events for this summer.

There is a chance that U.S. Federal Reserve will reduce the interest rate for the first time in ten years. Virendra Chauhan from Energy Aspects thinks that this decision might increase oil prices. He said that by reducing the interest rate, the demand for this commodity would grow due to this new policy. This will act as a catalyst for the oil prices as lowering interest rate can reverse the current situation.

According to the International Energy Agency (IEA), the demand for oil continues to decrease due to global economic problems and other issues. However, if the policymakers lower the interest rate, this might help to stabilize the oil market.

BP’s quarterly report

BP, which is one of the largest energy companies in the world, published the second-quarter earnings report. The results surpassed the expectations as according to the Reuters poll net profit would reach $2.5 billion. Company managed to surpass this amount, and net profit reached $2.8 billion. It is important to mention that the profit of its rivals Total and Norwegian Equinor reduced, whereas BP achieved better than expected results. An analyst from Bernstein calculated that BP’s results surpassed the expectation for ten quarters in a row.

Despite the oil prices company increased oil and gas production, and this helped to improve the situation. Another good news for BP is that the company’s operating cash flow reached $6.8 billion during the second quarter. BP’s dividend remained at the same level at 10.25 cents per share. However, the Chief Financial Officer Brian Gilvary stated that BP might increase the dividend until the end of the year.

According to the company, daily oil production reached 3.8 million barrels of oil per day. It means that in comparison with the last year, production increased by 4%. BP expects that during third-quarter, the production will decrease due to maintenance and the impact of the hurricane in the Gulf of Mexico.

Trade war and regional tensions affect the oil industry. Two meetings, one in Washington DC and one Shanghai will influence the oil prices during the upcoming days.