By Adedapo Adesanya
Crude oil prices went in different directions on Friday amid profit-taking as markets weighed supply concerns from Russia’s fuel export ban against demand woes from future rate hikes.
While the Brent futures lost 3 cents to close at $93.27 a barrel, the US West Texas Intermediate crude (WTI) futures rose by 40 cents to sell for $90.03 a barrel.
However, both benchmarks closed downwards on a week-on-week basis, with Brent shedding 0.3 per cent, breaking a three-week streak of gains, and WTI sliding by 0.03 per cent for the week, the first decline in four weeks.
Russia on Thursday temporarily banned exports of petrol and diesel to all countries outside a circle of four ex-Soviet states in order to stabilise the domestic market.
It said the ban did not apply to fuel supplied under inter-governmental agreements to members of the Moscow-led Eurasian Economic Union, which includes Belarus, Kazakhstan, Armenia, and Kyrgyzstan.
While this is expected to tighten the market, the high prices seen in recent days didn’t sway traders.
The ban will bring new uncertainty into an already tight global refined product supply picture and the prospect that the impacted countries will be seeking to bid up cargoes from alternative suppliers.
The US Federal Reserve officials warned of further rate hikes, even after voting to hold the benchmark federal funds rate steady at a meeting this week.
Market analysts have warned that a further rise was a risk for the market. Higher interest rates increase borrowing costs, which could slow economic growth and reduce oil demand.
Meanwhile, Libya has managed to maintain its 1.2 million barrels-per-day output during a flood disaster that has killed over 5,000 people, suggesting that despite the crisis the country’s oil output may continue unaffected.
US oil rig counts, an indicator of future production, also fell by eight to 507 this week, their lowest since February 2022, energy services firm Baker Hughes said.
Refineries in the United States routinely do maintenance in autumn after heavy runs to meet fuel demand from the summer driving season. Offline refinery capacity was expected to reach 1.4 million barrels per day this week according to IIR Energy versus 800,000 barrels per day offline last week.
Modupe Gbadeyanka