Oil prices increased on Monday as traders concentrated on a tighter supply outlook following Moscow’s temporary restriction on gasoline exports while avoiding any interest rate increases that may stifle demand.
After closing 3 cents lower on Friday, Brent crude futures increased 48 cents, or 0.5%, to $93.75 a barrel by 0110 GMT.
U.S. West Texas Intermediate oil futures maintained their gains for a second straight session, rising 50 cents or 0.6% to trade at $90.53 per barrel.
“Crude oil prices have started the week on the front foot, as the market continues to digest Russia’s temporary ban on diesel and gasoline exports, into an already tight market, offset with the Fed’s hawkish message that rates will stay higher for longer,” said Tony Sycamore, an analyst with IG Markets.
Last week, both contracts ended a three-week winning streak by falling after the Federal Reserve’s hawkish stance shook the world’s financial markets and stoked worries about oil demand.
Prices had increased by almost 10% over the previous three weeks on expectations of a significant shortfall in crude supply in the fourth quarter as a result of Saudi Arabia and Russia extending their production curbs until the end of the year.
In an effort to stabilize the domestic market, Moscow temporarily outlawed the export of gasoline and diesel to the majority of nations last week. This stoked worries about a lack of product supply, particularly for heating oil as the northern hemisphere enters winter.
Despite increased prices, there were 507 active oil rigs in the US last week, the lowest level since February 2022, according to a Baker Hughes survey released on Friday.
The world’s top importer of crude oil, China, is expected to release better economic data this week, which helped improved mood. Analysts warned that the highs reached in November 2022 last week would likely find technical resistance.
According to Goldman Sachs analysts, China’s manufacturing sector is anticipated to resume expansion in September, with the buying manufacturing index predicted to surpass 50 for the first time since March.
Positively, they continued, China’s oil demand rose 0.3 million barrels per day to 16.3 million bpd last week, in part because of a modest improvement in the demand for jet fuel for foreign flights.
Also Read | Writers Guild Reaches Tentative Agreement With Studios and Streamers, Union Says