Oil edged higher toward $94 a barrel, capping a tumultuous week that saw the Federal Reserve flagging a further rise in US interest rates this year and Russia ban diesel exports.
(Bloomberg) — Oil edged higher toward $94 a barrel, capping a tumultuous week that saw the Federal Reserve flagging a further rise in US interest rates this year and Russia ban diesel exports.
Brent futures were up 0.6%, little changed from a week earlier. The Fed signaled borrowing costs will stay higher for longer, boosting the dollar and dimming the allure of commodities including crude. Technicals had also been indicating that oil’s gains were overdone.
Still, there are plenty of signs of tightness in the physical market. Russia announced a temporary ban on diesel and gasoline exports on Thursday, lifting fuel prices. In addition, US crude stockpiles posted another decline, and oil’s backwardated timespreads point to strong competition for near-term supplies.
Crude has rallied strongly this quarter as Saudi Arabia and Russia extended their production curbs through the end of the year. The outlook for demand has also improved, with refiners in China, the world’s largest oil importer, ramping up processing to a record. That backdrop has prompted Chevron Corp. to Goldman Sachs Group Inc. to make the case for a return of $100 oil.
“It is 4Q versus 2024, supply deficit against economic malaise,” PVM Oil Associates analyst Tamas Varga wrote in a note. “Inflation is easing in some cases, however increasingly likely elevated borrowing costs throughout 2024 justifiably cause anxiety amongst investors.”
In the Middle East, meanwhile, US officials met with Iraqi Prime Minister Mohammed Shia Al-Sudani for talks, and emphasized the urgency of reopening an Iraq-Turkey crude pipeline as soon as possible, the White House said.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.