Brent Crude Nears $100 Amid Rate Hike Uncertainty, Russian Oil Ban

November 5, 2022
brent crude oil

By Adedapo Adesanya

Brent crude neared the $100 region after rising by $3.99 to trade at $98.57 per barrel on Friday amid uncertainty around future interest rate hikes by the United States Federal Reserve and a looming ban on Russian oil.

Also, fresh employment data from the United States suggested some loosening in labour market conditions that could give the Federal Reserve cover to shift towards smaller rate increases, pushing the West Texas Intermediate (WTI) crude futures higher by $2.96 to $92.61 per barrel.

The US Labor Department’s non-farm payrolls report on Friday showed a rise in the unemployment rate to 3.7 per cent last month from 3.5 per cent in September.

Richmond Federal Reserve President Thomas Barkin on Friday said he is ready to act more deliberatively on consideration of the pace of future US interest rate hikes.

However, he said rates could continue rising for longer and to a higher end point than previously expected.

Support also came as a former Chinese disease control official said substantial changes to the country’s COVID-19 policy are to take place soon.

Prices were buoyed this week by the rumours of an end to stringent lockdowns despite the lack of any announced changes.

While demand concerns weighed on the market, supply is expected to remain tight because of Europe’s planned embargoes on Russian oil and a slide in US crude stockpiles.

The EU ban on Russian crude imports is due to take effect from December 5 as details of the G7 price cap aimed at alleviating constraints on Russian flows outside the EU are still under discussion.

The number of total active drilling rigs in the United States rose by 2 this week, according to new data from Baker Hughes published on Friday. The total rig count increased to 770 this week—220 rigs higher than the rig count in the same period in 2021 and 305 rigs lower than the rig count at the beginning of 2019, prior to the pandemic.

Investors will await the US Energy Information Administration’s short-term energy outlook and the November US Consumer Price Index for insight on the pace of inflation which is set for release next week.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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