Contents
- 1 Brent Futures Hit $90.68 Per Barrel
- 2 Technical Overbought Territory Continues
- 3 Saudi Arabia and Russia Extend Supply Cuts
- 4 U.S. Disrupts Iranian Crude Oil Shipment
- 5 Concerns Persist Over Chinese Demand
- 6 Potential for Increased Crude Demand
- 7 Germany’s Move to Reduce Fossil Fuel Demand
- 8 Central Banks and Their Impact
Oil prices surged approximately 1% to reach a nine-month high on Friday, driven by rising U.S. diesel futures and escalating concerns regarding tight oil supplies. This surge followed Saudi Arabia and Russia’s recent extension of voluntary cuts.
Brent Futures Hit $90.68 Per Barrel
Brent futures climbed by 76 cents, equivalent to 0.9%, settling at $90.68 per barrel as of 12:08 p.m. EDT (1608 GMT). Simultaneously, U.S. West Texas Intermediate (WTI) crude witnessed an increase of 67 cents, or 0.8%, reaching $87.54.
Technical Overbought Territory Continues
Both crude benchmarks have now spent six consecutive days in technically overbought territory. Brent is currently on course for its highest closing price since November 16, with WTI tracking its highest since November 11. For the week, both benchmarks experienced approximately a 3% increase. Brent recorded a 5% gain last week, while WTI surged by about 7%.
Saudi Arabia and Russia Extend Supply Cuts
This week, Saudi Arabia and Russia prolonged their voluntary supply cuts, which total 1.3 million barrels per day (bpd), extending them until the end of the year. Analysts at Commerzbank expressed skepticism about Saudi Arabia’s ability to terminate these cuts at year-end without causing a price downturn.
U.S. Disrupts Iranian Crude Oil Shipment
Separately, the United States confirmed its disruption of a multimillion-dollar shipment of crude oil by Iran’s Islamic Revolutionary Guard Corps in April. Over 980,000 barrels of contraband crude oil, violating U.S. sanctions, were seized.
Concerns Persist Over Chinese Demand
The oil market remains apprehensive about the demand outlook in China, the world’s largest oil importer. China’s post-pandemic recovery has been sluggish, and stimulus pledges have fallen short of expectations. The country is currently grappling with the heaviest rainfall in 140 years, affecting Hong Kong and causing casualties.
Data from Thursday revealed a decline in overall Chinese exports and imports for August, attributed to weak consumer spending and subdued overseas demand.
Potential for Increased Crude Demand
Despite economic slowdowns, China often boosts its storage capacity, particularly when Russian crude is competitively priced. Last month, Chinese crude imports surged by nearly 31%. Additionally, a strike by workers at Chevron’s liquefied natural gas (LNG) projects in Australia, responsible for about 5% of the world’s LNG supply, could further support crude demand.
Germany’s Move to Reduce Fossil Fuel Demand
In Germany, the lower house of parliament passed a bill aimed at reducing future fossil fuel demand by phasing out oil and gas heating systems.
Central Banks and Their Impact
Oil traders are closely monitoring central banks in the U.S. and Europe to gauge their stance on fighting inflation through interest rate hikes. However, decisions made by these central banks can influence economic growth and oil demand.
John Evans of oil broker PVM emphasized the delicate balance faced by Riyadh, as tightening the oil market could potentially disrupt central banks’ progress in curbing inflation through price rises.
Disclaimer: This article serves solely for informational purposes and should not be construed as financial advice. Thus, we strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
