Oil stable ahead of Russian oil ban
2023.02.02 08:44
Oil stable ahead of Russian oil ban
By Tiffany Smith
Budrigannews.com – After falling during the previous session, oil prices held steady on Thursday, despite the prospect of sanctions against Russian oil products adding to supply uncertainty.
By 0937 GMT, futures were down 10 cents, or 0.1 percent, to $82.74 a barrel, while West Texas Intermediate (WTI) futures were up 1 cent, or $76.40.
After data from the U.S. government revealed a significant increase in oil stocks, both benchmarks fell more than 3% overnight.
On Wednesday, the Federal Reserve of the United States increased its target interest rate by a quarter of a percentage point, but it continued to promise “ongoing increases” in borrowing costs as part of its fight against inflation.
In a statement that marked an explicit acknowledgement of the progress made in reducing the pace of price increases from the 40-year highs reached last year, the U.S. central bank stated, “Inflation has eased somewhat but remains elevated.”
On Thursday, the plunged to a nine-month low in response to the softer rate hike bets. Oil at a dollar price is less expensive for holders of other currencies when the dollar is weaker, which boosts demand.
In a note, investment strategy firm BCA Research said that “overvalued conditions do not augur well for the dollar’s long-term outlook.” It was referring to an improved global economic outlook that was largely based on China’s reopening after strict COVID-19 curbs.
“We anticipate that oil will be the commodity that benefits most from an improvement in the momentum of the Chinese economy,”
In addition, prices are rising in light of the European Union’s February 5 ban on Russian refined products.
After delaying a decision on Wednesday due to divisions among member states, EU nations will attempt to reach an agreement on a proposal from the European Commission to set price caps on Russian oil products on Friday, according to diplomats.
Last week, the European Commission made the suggestion that beginning on February 5, the EU would impose a price cap of $45 per barrel on discounted products like fuel oil and $100 per barrel on premium Russian oil products like diesel.
In the meantime, at a meeting on Wednesday, an OPEC+ panel approved the producer group’s current output policy. This meant that the production cuts that were agreed upon last year were kept, despite hopes of higher Chinese demand and uncertain prospects for Russian supply.
To help the market, OPEC+ agreed to reduce its production target by 2 million barrels per day (bpd), or about 2% of global demand, starting in November of last year and continuing until the end of 2023.
