Oil prices rising due to production cuts in Russia
2023.02.24 07:52
Oil prices rising due to production cuts in Russia
By Kristina Sobol
Budrigannews.com – Oil prices gained for a second session on Friday as concerns about global economic activity and the possibility of lower Russian exports outweighed rising US inventories.
By 1042 GMT, futures had risen 89 cents, or 1.1 percent, to $83.10 per barrel. Brent crude prices were about 14% lower than a year ago on the anniversary of Russia’s invasion of Ukraine. On March 8, 2022, they reached a 14-year high of nearly $128 a barrel.
To $76.18, West Texas Intermediate futures (WTI) gained 79 cents, or 1.05%.
On Russia’s plans to reduce oil exports from its western ports by up to 25% in March, which exceeded its previously announced production cuts of 500,000 barrels per day, the benchmarks ended about 2% higher in the previous session.
Yeap Jun Rong, a market strategist at IG, stated, “Higher-than-expected U.S. crude oil inventories continue to challenge the oil demand outlook, but expectations for lower Russian production have an offsetting impact.”
The amount of inventory in the United States is at an all-time high.
The U.S. Energy Information Administration reported that in the week ending February 17, crude stocks in the United States increased by 7.6 million barrels to approximately 479 million barrels. [ EIA/S] Additionally, the supply outlook was further impacted by indications that tankers carrying Russian crude and refined products are accumulating.
“as global growth headwinds strengthen and excess ‘dark’ inventory exacerbated by a flooding of Russian oil is worked off,” according to a note from JP Morgan on Friday, “short-term prices are more likely to drift lower towards the $70s than rise.”
In addition, the bank stated that it anticipates that the Organization of the Petroleum Exporting Countries (OPEC) will reduce production to contain declines in oil prices.
After a decline of about 4% the week before, concerns about rising interest rates—which could weaken the dollar and reduce fuel demand—have kept oil prices largely flat for the week.
According to the minutes of the most recent meeting of the United States Federal Reserve, the majority of officials remained hawkish regarding inflation and tight labor market conditions, indicating further monetary tightening.
The expected for a fourth consecutive week of gains was supported by the possibility of additional rate hikes. For the month, the index is currently up about 2.5%.
For holders of other currencies, a firm dollar makes commodities priced in the greenback more expensive.
