Oil prices dropped earlier today but have recently been recovering, with U.S. crude up nearly 1.5% to $96.72 a barrel on Wednesday. The latest decline was brought on by a drop in demand due to the ongoing trade war between the U.S. and China and also due to the Russo-Ukrain war.
Brent oil futures closed at $96.72 a barrel, up 13 cents. West Texas Intermediate crude in the United States finished 27 cents higher at $90.77. Both benchmarks dropped around 1.5% last week.
Oil prices were stable on Friday, but dipped for the week due to a stronger US currency and concerns that an economic downturn would reduce oil demand.
Brent oil futures closed at $96.72 a barrel, up 13 cents. West Texas Intermediate crude in the United States finished 27 cents higher at $90.77. Both benchmarks dropped around 1.5% last week.
Oil momentarily rose in turbulent trade after Richmond Federal Reserve President Thomas Barkin nL1N2ZV147 said that the desire to raise rates must be weighed with the impact rate hikes have on the economy. However, crude oil lost ground as market fears about imminent rate rises returned.
The dollar's strength reached a five-week high, limiting crude gains by making oil more costly for purchasers in other currencies. [USD/]
According to Reuters, Haitham Al Ghais, the new Secretary General of the Organization of Petroleum Exporting Countries, is bullish about oil demand until 2023.
OPEC is determined to keep Russia in the OPEC+ group, according to Al Ghais, ahead of a meeting on September 5.
Suppliers may tighten again as European consumers seek alternate supplies to replace Russian oil before European Union sanctions take effect on December 5.
"We estimate that the EU will need to replace 1.2 million barrels per day of seaborne Russian crude imports with petroleum from other locations," stated FGE in a note.
"Although the oil complex has been able to shrug off a strong dollar on any given day," Jim Ritterbusch of oil trading advice company Ritterbusch & Associates wrote in a note.
The price difference between immediate and second-month Brent futures has shrunk by roughly $5 a barrel since the end of July, to under $1. The WTI differential has reduced to a 39-cent premium from over $2 in late July.
Data earlier this week indicated that the world's largest producer exported a record 5 million barrels of oil per day last week, with oil companies finding demand from European nations wanting to replace Russian fuel. [EIA/S]
However, the number of U.S. oil rigs, an early indicator of future supply, remained unchanged this week at 601, according to Baker Hughes Co, as energy companies gradually increase production to pre-pandemic levels, with shale oil output expected to reach its highest level since March 2020 in September. [RIG/U]
Meanwhile, money managers reduced their net long U.S. crude futures and options holdings in New York and London by 18,389 contracts to 154,824 in the week ending Aug. 16, according to the Commodity Futures Trading Commission (CFTC).