Oil prices stabilized on Friday amid expectations of tighter crude supply, with hopes of stronger demand from China and a weaker U.S. dollar outweighing fears a global economic slowdown resulting from rising interest rates.
Brent crude, the benchmark for two-thirds of the world’s oil, was up 1.12% at $93.50 a barrel. West Texas Intermediate, the gauge that tracks U.S. crude, closed up 0.54% at $85.05 a barrel.
Oil prices rose on Thursday after China announced it was considering reducing the quarantine period for visitors to 7 days from 10 days, Bloomberg reported. However, there has been no official confirmation from Beijing.
The dollar, meanwhile, eased against a basket of currencies after it was reported that some Federal Reserve officials had signaled greater unease with steep interest rate hikes to combat inflation, despite plans for a mega rate hike next month.
“Brent now appears to be settling into a new range, possibly between $90 and $100, a level that most can be relatively comfortable with,” said Craig Erlam, senior market analyst at Oanda.
Investors’ attention should turn to “the EU’s plan to completely cut off Russian imports by early December, and the potential introduction of a price cap”, said Edward Bell, senior director of market economy at Emirates NBD.
EU deadline to stop importing Russian crude oil is December 5while a ban on refined products takes effect on February 5.
“If Russia goes ahead with its plan not to sell to countries participating in the cap, then oil markets could tighten significantly in the last month of the year,” Bell said.
Prices rose despite comments from Philadelphia Federal Reserve Chairman Patrick Harker, who said Thursday that further interest rate hikes would be needed to contain inflation.
After being criticized for moving too slowly to rein in rising prices and lagging the inflation curve, the US Fed has shifted gears and stepped up efforts to raise interest rates to bring prices down to consumption.
Last month, the Fed raised its key rate by 75 basis points, its third straight increase of three-quarters of a percentage point.
The US central bank is expected to hike rates another 75 basis points at its meeting in the first week of November.
Annual title inflation in the world’s largest economy rose 8.2% in September, down from its peak of around 9% in June, but still near the highest levels since the early 1980s. index for the month was up 6.6% from a year ago, the biggest 12-month rise since August 1982.
In an attempt to bring down the price of gasoline, the Biden administration announced on Wednesday the release of 15 million barrels of the country’s strategic petroleum reserve. U.S. crude futures are up about 2% from Tuesday’s close.
Mr Biden also called for higher domestic oil production as U.S. shale producers – responsible for most of the country’s new crude production – have been reluctant to increase activity and instead focused on oil production. increased returns for shareholders.
However, recent data has indicated a nascent recovery in the US shale patch.
Oil production in the Permian Basin of Texas and New Mexico, the largest shale basin and the focal point of the U.S. shale resurgence, is expected to increase by around 50,000 barrels per day to a record 5, 45 million bpd in November, according to the US Energy Information Administration. (EIA) said Monday.
The EIA forecasts U.S. crude oil production to reach 11.7 million bpd in 2022 and 12.4 million bpd in 2023, surpassing the record of 12.23 million bpd set in 2019.
Updated: October 22, 2022, 04:33