Oil Prices Rose Sharply on Monday Amidst Supply Tightening and Rate Hike Concerns
Oil prices rose on Monday due to concerns about tightening supply after Moscow issued a temporary ban on fuel exports. (Photo: CNBC)
Oil Prices Rose as Moscow’s Export Ban Sparks Supply Concerns
According to the WHTC article, oil prices rose on Monday due to Moscow’s temporary ban on fuel exports, raising concerns about supply constraints. Brent crude futures rose by 0.5% to $93.75 per barrel after a minor dip on Friday, while U.S. West Texas Intermediate (WTI) crude futures increased by 0.6% to $90.53 per barrel. The market’s optimism stemmed from Moscow’s ban on diesel and gasoline exports, which compounded supply constraints.
However, investors remained cautious due to potential future interest rate hikes signaled by the Federal Reserve, which could impact oil demand. Both Brent and WTI contracts faced challenges, ending a three-week winning streak. Oil prices had recently surged by over 10% in response to expectations of a significant supply deficit in the fourth quarter.
This was influenced by Saudi Arabia and Russia’s decision to extend supply cuts. Moscow’s export ban added to concerns about product availability, especially heating oil for the upcoming winter.
Oil Prices Rose Amidst Declining U.S. Oil Rig Count and Optimism Over Chinese Economic Recovery
In the U.S., the number of active oil rigs fell to 507, the lowest since February 2022, despite higher prices. Nevertheless, oil prices rose as the market also considered improved economic data expected from China, the world’s largest crude oil importer. China’s manufacturing sector was forecasted to return to expansion mode in September, with the purchasing manufacturing index expected to exceed 50 for the first time since March, according to Goldman Sachs analysts.
Additionally, China’s oil demand increased by 0.3 million barrels per day to 16.3 million barrels per day, partly due to a gradual recovery in jet fuel demand for international flights.