Oil Prices Rise On Tight Supply Outlook As Russia Bans Fuel Exports

Oil Prices Rise On Tight Supply Outlook As Russia Bans Fuel Exports

Rise In Petrol, Diesel Prices Unlikely As Election Season Nears: Moody’s

Investors are focusing on a tighter supply outlook as oil prices rose on Monday. This comes after Moscow issued a temporary ban on fuel exports while remaining cautious about further rate hikes that could dampen demand.

Brent crude futures increased by 0.5 per cent, or 48 cents, to USD 93.75 a barrel by 0110 GMT after settling three cents lower on Friday. Meanwhile, US West Texas Intermediate crude futures rose for the second consecutive session, trading at USD 90.53 a barrel, up 50 cents, or 0.6 per cent.

According to IG Markets analyst Tony Sycamore, crude oil prices have started the week on the front foot.

The market is still digesting Russia’s temporary ban on diesel and gasoline exports, which is occurring in an already tight market.

This is offset by the Federal Reserve’s hawkish message that rates will stay higher for longer. Both contracts snapped a three-week winning streak to fall last week after a hawkish Federal Reserve stance rattled global financial sectors and raised oil demand concerns.

Over the past three weeks, prices had rallied more than 10 per cent on forecasts of a wide crude supply deficit in the fourth quarter. This came after Saudi Arabia and Russia extended additional supply cuts to the end of the year. Moscow temporarily banned gasoline and diesel exports to most countries last week to stabilize the domestic market. However, this fanned concerns of low product supply, especially for heating oil, as the northern hemisphere heads into winter.

Last week, the number of operating oil rigs in the United States fell by eight to 507, their lowest since February 2022, despite higher prices, according to a weekly report from Baker Hughes. Analysts expect better economic data this week from China, the world’s largest crude importer, which could lift sentiment. However, they also flagged that oil prices face technical resistance at November 2022 highs that were hit last week.

Goldman Sachs analysts said that China’s manufacturing sector is expected to return to expansion mode in September. They forecast the purchasing manufacturing index to rise above 50 for the first time since March. A positive sign is that China’s oil demand increased 0.3 million barrels per day to 16.3 million bpd last week. This was partly due to a gradual recovery in jet fuel demand for international flights.

Leave a Reply

%d bloggers like this: