Friday's Asian trading saw a little increase in oil prices as markets overcame their fears about rising interest rates, which had been a major drag on prices this week. Because of substantial profit-taking and worries about rising interest rates in the developed world, crude prices were still expected to conclude the week down. The Federal …
Friday’s Asian trading saw a little increase in oil prices as markets overcame their fears about rising interest rates, which had been a major drag on prices this week. Because of substantial profit-taking and worries about rising interest rates in the developed world, crude prices were still expected to conclude the week down. The Federal Reserve, the Bank of England, and the European Central Bank all issued warnings that interest rates would continue to rise through 2024. However, a Russian embargo on petroleum exports, which foreshadows increasingly tighter global supplies in the coming weeks, slightly offset this.
The export embargo follows more significant than anticipated production cuts from Saudi Arabia and Russia, which were the main factors behind an increase in oil prices this year. By 21:05 ET (01:05 GMT), West Texas Intermediate crude futures increased 0.3% to $89.89 per barrel, while Brent oil futures increased 0.3% to $93.52 per barrel. For the week, both contracts were projected to lose 0.6% to 1.3% of their value. Despite the possibility of fewer supplies, oil prices have remained comparatively higher for the year. The reduction of 1.3 million barrels per day from Saudi Arabia and Russia would significantly reduce oil supplies in the upcoming months. Through the rest of 2023, the price of Brent oil, the worldwide benchmark, is anticipated to range between $90 and $100 per barrel.
After Moscow halted fuel imports to the majority of nations outside of the four former Soviet states with immediate effect, expectations of a tighter supply increased on Thursday. Even after the summer travel season came to an end, supplies in the United States remained scarce, according to inventory data released earlier this week. But this week’s hawkish signals from the Federal Reserve hit the oil markets particularly hard. While the central bank maintained its rate policy, it cautioned that borrowing costs could possibly rise this year and will decline by a lower margin than anticipated in 2024. The warning increased worries that rising interest rates will have an adverse effect on economic activity and oil consumption in the upcoming months, especially in light of similar indications from the BOE and ECB. After oil prices rocketed to 10-month highs early in September, this also encouraged a bit of profit-taking in the markets.
The dollar’s strength, which reached six-month highs in response to the Fed’s signals, put pressure on crude markets since it raises the price of oil for purchasers abroad. Now, attention is focused on a Bank of Japan meeting later in the day for additional monetary policy indications, particularly after the bank hinted at the possibility of ending its negative rate regime.
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