By Adedapo Adesanya
Oil traded higher on Friday, boosted by further signals that the Organisation of the Petroleum Exporting Countries (OPEC) could cut output.
Brent crude futures rose $1.65 to settle at $100.99 a barrel while the United States West Texas Intermediate (WTI) crude futures rose 54 cents to settle at $93.06 a barrel.
Overall, Brent gained 4.4 per cent for the week, while WTI recorded a 2.5 per cent.
The United Arab Emirates (UAE) became the latest OPEC+ member to state it aligns with Saudi Arabia’s thinking on crude markets.
Reuters reported that although there has been no official statement from the producer, a source familiar with the matter revealed.
OPEC’s de facto leader, Saudi Arabia, on Monday, flagged the possibility of introducing production cuts to balance the oil market.
Following the statement by Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, there has been a flurry of support expressed by OPEC+ member states, including Iraq, Venezuela, and Kazakhstan, about OPEC’s readiness to intervene and restore balance in the oil market.
Oman, a member of the alliance, also said it supports OPEC+ efforts that maintain global markets stability in the face of fluctuations and challenges, the Omani oil ministry said in a tweet on Friday.
Prices were, however, pressured as the US Federal Reserves Chair Jerome Powell said tight monetary policy may be in store “for some time” to fight inflation, meaning slower growth, a weaker job market, and “some pain” for households and businesses.
In a speech kicking off the Jackson Hole central banking conference in Wyoming, Mr Powell said the US central bank will raise rates as high as needed to restrict growth and would keep them there “for some time” to bring down inflation that is running at more than three times the Fed’s 2 per cent goal.
He said, “Reducing inflation is likely to require a sustained period of below-trend growth.
“While higher interest rates, slower growth, and softer labour market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”
As that pain increases, Mr Powell said, people should not expect the Fed to dial back its monetary policy quickly until the inflation problem is fixed.
Meanwhile, it was reported that some European Central Bank policymakers want to discuss a 75 basis point interest rate hike at a September 8 policy meeting, even if recession risks loom, as the inflation outlook is deteriorating.
In US supply, the oil drilling rig count, an indication of future production, rose by 4 to 605 in the week to Aug. 26, Baker Hughes Co said on Friday.
Dipo Olowookere