By Adedapo Adesanya
The prices of Brent futures and the US West Texas Intermediate (WTI) futures went down by about 1 per cent on Friday, due to macroeconomic concerns and sustained profit-taking.
Data showed that Brent fell by 7 cents to $95.31 per barrel and WTI depreciated by 92 cents to $90.97.
Prices rose about 30 per cent in the third quarter of the year helped by the production cuts by the Organisation of the Petroleum Exporting Countries and allies (OPEC+). This action squeezed global crude supply.
Brent was about 2.2 per cent in the week and 27 per cent in Q3 while the US crude was up by per cent in the week and 29 per cent in the quarter.
The shortage in supply intensified by the production cutbacks initiated by Saudi Arabia and Russia under OPEC+, totalling 1.3 million barrels per day until the end of the year has been the major source of the rally in prices.
Furthermore, Russia’s sustained ban on fuel exports due to the instability in its domestic market accentuates the tightening grip on global supply, with implications for price movements in the short and medium term.
Also, investors looked ahead to a potential partial US government shutdown on Sunday. Partisan rifts in the US House of Representatives continue to grow just a day before the deadline.
A shutdown of broad parts of the government in the world’s largest oil producer would start on Sunday as the new fiscal year starts without new spending legislation from Congress. Chances of a shutdown increased on Thursday as the House pursued partisan spending cuts and the Senate advanced separate legislation to temporarily extend spending.
Worries about the Chinese economy also intensified as shares of indebted property developer Evergrande Group were suspended until further notice.
The OPEC+ ministerial panel meeting will take place on October 4. According to analysts, there is an increasing probability that voluntary supply cuts by Saudi Arabia will be reduced.
Total rig count fell by 51 in the third quarter, the cuts have slowed compared with a reduction of 81 in the second quarter as oil prices have rebounded due to tightening supplies.
