Home NewsCommodities News Brent edges higher on supply concerns after price cap on Russian oil By Reuters

Brent edges higher on supply concerns after price cap on Russian oil By Reuters

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Brent edges higher on supply concerns after price cap on Russian oil By Reuters

© Reuters. FILE PHOTO: Crude oil storage tanks are seen at Kinder Morgan Wharf in Sherwood Park near Edmonton, Alberta, Canada, on November 14, 2016.REUTERS/Chris Helgren

Alasi Somaseka

HOUSTON (Reuters) – Brent crude prices edged higher in choppy trade on Friday after Russia said it would not supply crude to countries that decide to impose price caps on its oil.

Futures were up 56 cents, or 0.5%, at $104.42 a barrel by 1:12pm ET (1712 GMT), while U.S. West Texas Intermediate (WTI) was down 19 cents cents, or 0.1 percent, to $96.16 a barrel.

Russian Central Bank Governor Elvira Nabiullina said crude oil and oil products would be diverted to countries ready to “cooperate” with Russia, adding that the cap would stimulate global oil prices.

“There is a growing perception that the U.S. and the European Union will impose price caps on Russian oil by the end of the year,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“Past history has shown that government price caps on commodities are often short-lived and quickly lead to excessive prices,” he added.

WTI was on track to end lower for a third straight week, having tumbled in the past two sessions after data showed U.S. gasoline demand fell nearly 8% from a year earlier during the summer driving season, hit by record prices.

By contrast, signs of strong Asian demand underpinned the Brent benchmark, putting it on track for its first weekly gain in six.

Despite rising prices, India’s demand for gasoline and distillate fuels hit a record high in June, with total refined product consumption up 18% from a year ago and Indian refineries operating near their highest ever, RBC analysts said. busy level.

However, prices were subdued by concerns that higher interest rates could cut demand and the recovery of some Libyan production.

Libya’s oil ministry said Libya’s oil production exceeded 800,000 barrels per day and will reach 1.2 million barrels by next month.

Iraq has the capacity to increase oil production by 200,000 barrels a day this year, an executive at Iraq’s Basra Oil Co said.

U.S. oil rigs, an early indicator of future output, also held steady at 599 this week, according to energy services firm Baker Hughes.

Data on Friday showed that the global economy appeared increasingly likely to slip into a severe slowdown, as central banks aggressively reversed the ultra-easy monetary policies they adopted to support growth during the pandemic.

“The economic side is still negative, but we’re still in a structural shortage of immediate oil, which means that physical buyers will be there to support dips, knowing the geopolitical uncertainty,” manager Stephen Innes said SPI Asset Management Partner.

Near-term moves in crude oil and interest rate futures anticipate a downturn in the business cycle, which will lead to a decline in oil consumption through the end of the year and in the first three months of 2023.

Investors are also watching the Fed’s interest rate decision next week. Fed officials said the central bank may raise interest rates by 75 basis points at its July 26-27 meeting.

China will also vigorously consolidate its economic recovery, especially in the third quarter, according to state media.

Supply concerns eased slightly after Libya resumed production at several fields earlier this week, and markets are also eyeing next week’s preliminary OPEC production estimates for guidance.

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