By Adedapo Adesanya
Oil prices edged higher on Tuesday, spurred by further support from a weaker US Dollar and supply concerns highlighted by a comment from Saudi Arabia.
The US Dollar index fell yesterday, making greenback-denominated oil less expensive for other currency holders and helping to push prices higher.
While the Pound Sterling rallied as Mr Rishi Sunak became Britain’s prime minister, boosting investor sentiment, the American dollar index fell to a three-week low, bolstering commodity prices.
Consequently, the Brent crude futures rose by 26 cents to settle at $93.52 per barrel, while the US West Texas Intermediate (WTI) crude futures rose by 74 cents to $85.32 per barrel.
Further support came from comments by Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, that energy stockpiles were being used as a mechanism to manipulate markets.
“It is my duty to make clear that losing emergency stocks may be painful in the months to come,” he told the Future Initiative Investment (FII) conference in Riyadh, the Kingdom’s capital.
The comment appeared to be a criticism of US President Joe Biden’s decision to sell oil from the nation’s emergency oil reserve as he tries to lower gasoline prices ahead of mid-term elections on November 8.
Relations with the US deteriorated earlier this month when the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), of which Saudi is the de facto leader, decided to cut output, prompting the Biden administration to warn there would be consequences.
Meanwhile, the International Energy Agency (IEA) said tightening markets for liquefied natural gas (LNG) worldwide and supply cuts by major oil producers have put the world in the middle of the first truly global energy crisis.
The executive director of the agency, Mr Fatih Birol, warned that natural gas and LNG markets would tighten further in 2023, with only 20 million tons of new liquefaction capacity scheduled to come online in that year.
Speaking at the Singapore International Energy Week, the head of the IEA also said that while supply remains tight, demand for gas will continue to be strong, especially in Europe and possibly in China.
However, uncertain economic activity in the US and China, the world’s two biggest oil consumers, limited oil gains.
On Monday, government data showed China’s crude oil imports in September were 2% lower than a year earlier, while business activity contracted in the eurozone, Britain, and the US in October.
Modupe Gbadeyanka