ISLAMABAD: Despite a slight increase on Friday, oil prices remained posted at their steepest weekly losses since March 2023 after another partial lifting of the fuel export ban by Russia compounded demand fears due to macroeconomic winds.
On Friday, Brent futures settled up by 51 cents to settle at $84.58 per barrel, whereas the US West Texas Intermediate (WTI) crude futures went up by 48 cents to settle at $82.79.
However, on a weekly basis, Brent witnessed a decrease of 11 percent, and WTI witnessed an over 8 percent decline on worries that persistently high-interest rates would slow global growth and affect fuel demand.
Fluctuation in Oil Prices
The sentiment of the statistics is mixed for oil prices. According to analysts, a strong US economy could sustain sentiment for near-term oil demand; however, on the other hand, the statistics resulted in a stronger US dollar and enhanced bets on another increase in the interest rate in 2023.
They are of the view that a strong US dollar is typically negative for oil demand, making the commodity relatively expensive for those having other currencies.
ING analysts remarked in a note that the current jobs number in the US kept alive the possibility of another rate hike and certainly backed the Federal Reserve’s argument on the need for interest rates to stay higher for longer.
Meanwhile, Russia has announced the lifted ban on diesel exports for supplies delivered to ports by pipeline. Companies still must sell at least 50 percent of their diesel production to the domestic market.
In addition, the price spread between gasoil and Brent futures went down to the lowest since July at $23.59 a barrel on the news but then rebounded to $25.84.
“Fear for the health of the global economy and thus oil demand going forward is at the heart of the sell-off,” SEB analyst Bjarne Schieldrop stated.
But reports of firmer Chinese travel activity have, for now, provided a base for prices. As reported by the Xinhua news agency, the country’s mid-autumn and National Day holiday travel rose 71.3 percent on the year and 4.1 percent compared with 2019 to 826 million trips.
In an indication of future US supply, US oil rigs went down by 5 percent to settle at 497 this week, their lowest number since February 2022, energy services firm Baker Hughes said on Friday.
Money managers cut their net long US crude futures and options positions in the week of October 3 by 5,877 contracts to 279,759, the US Commodity Futures Trading Commission (CFTC) stated on Friday.
