Join now for FREE unlimited access to Reuters.com
NEW YORK, Aug 18 (Reuters) – Oil prices rose around 3% on Thursday as strong U.S. fuel consumption data and an expected drop in Russian supply later in the year hit offset fears that slowing economic growth will undermine demand.
Brent crude futures rose $2.47, or 2.6%, to $96.12 a barrel as of 11:41 a.m. EDT (1541 GMT), while U.S. crude West Texas Intermediate (WTI ) rose $2.16, or 2.5%, to $90.27.
Prices were up more than 1% in the previous session, although Brent fell at one point to its lowest level since February as signs of a slowdown mounted in some places.
Join now for FREE unlimited access to Reuters.com
The oil complex is “moving away from the large drawdown of (US) crude inventories, rising product demand and (the) apparent stall in Iran nuclear talks,” analysts said. energy consultancy Ritterbusch and Associates in a note.
U.S. crude inventories (USOILC=ECI) fell 7.1 million barrels in the week to August 12, according to data from the Energy Information Administration (EIA), against expectations of a decline in 275,000 barrels, as exports reached a record 5 million barrels per day (bpd).
European Union bans on Russian exports could significantly tighten supply when restrictions on imports of crude and products transported by sea into the bloc intensify in the coming months and drive up prices, warn. analysts.
“EU embargoes will force Russia to close around 1.6 million (bpd) of production by the end of the year, rising to 2 million bpd in 2023,” said consultancy BCA research. in a note. “EU embargoes on Russian oil imports will significantly tighten markets and push Brent to $119 a barrel by the end of the year.”
Russia, however, expects increased production and exports until the end of 2025, according to an economy ministry document seen by Reuters, indicating that energy export revenues will increase by 38% this year. , partly due to higher oil export volumes. Read more
MORE CAREFUL
Keeping oil prices from rising too high was the possibility of increased supplies from Iran and fears that demand could plummet if China imposes more lockdowns to stop the spread of COVID, as well as a slowdown. economic growth as central banks raise interest rates to control runaway inflation. Read more
The market is waiting for progress on talks to revive the 2015 nuclear deal between Iran and world powers, which could lead to an increase of about 1 million bpd in Iranian oil exports.
“We may be seeing traders taking a more cautious approach given the proximity of a decision on the Iran nuclear deal,” said Craig Erlam, senior market analyst at OANDA. “There remains a lot of doubt that he will cross the line, but if he does, it could be the catalyst for another move down.”
Open interest in U.S. futures on the New York Mercantile Exchange fell Wednesday to its lowest level since January 2015 for the third day in a row, as investors slashed risky assets like commodities as central banks feared further to raise rates. Read more
San Francisco Federal Reserve Chair Mary Daly said a rate hike of 50 or 75 basis points in September would be a “reasonable” way to get short-term borrowing costs to where they are. must be to bring inflation down. Read more
The US dollar index
A stronger dollar reduces oil demand by making fuel more expensive for buyers using other currencies.
Join now for FREE unlimited access to Reuters.com
Reporting by Scott DiSavino; Additional reporting by Noah Browing in London, Florence Tan in Singapore and Stephanie Kelly in New York; Editing by Kirsten Donovan and David Holmes
Our standards: The Thomson Reuters Trust Principles.