Oil prices hold firm as Russia puts more pressure on supplies
Oil markets have stabilised in this morning’s trading, with consolidating historic price gains on both major benchmarks.
Brent Crude climbed 0.59 per cent to $93.82 per barrel, while WTI Crude was up 0.47 per cent to $90.45 per barrel in this morning’s trading.
Investors appear to be gripped by further concerns of market tightness, after Russia imposed a temporary ban on fuel exports.
This follows oil markets dropping last week after a month-long rally, which saw oil prices ease back to the low nineties after raised expectations of crossing the century milestone.
Sustained hawkish responses to inflation, chiefly from the US Federal Reserve, alongside a sluggish economic recovery in China has raised concerns over demand – and weighed down prices.
However, markets have also been buoyed by growing expectations of a supply crunch, with OPEC and its allies including Russia (OPEC+) cutting over five million barrels per day from global markets.
Prices rallied more than 10 per cent this month after Saudi Arabia and Russia extended unilateral supply cuts to the end of the year.
Concerns have only been heightened by Russia’s decision to temporarily ban gasoline and diesel exports to most countries to stabilise the domestic market as Europe heads into autumn – and increased heating demand.
IG Markets analyst Tony Sycamore said: “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.”
There is the potential for improved demand sentiment entering the market this week, with expectations of more positive economic data from China this week.
The country’s manufacturing sector is expected to expand this month, with the purchasing manufacturing index forecast to rise above 50 for the first time since March, according to Goldman Sachs forecasts.