Business

Oil climbs as dollar slips and supply risks linger

Pump jacks operate at sunset in an oil field in MidlandPump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

  • Brent, WTI claw back some losses
  • Looming European ban on Russian crude supports market
  • More rate hikes, recession fears weigh on market

SINGAPORE, Nov 4 (Reuters) – Oil climbed on Friday as the dollar eased and supply risks lingered, though recession fears and China’s COVID outbreaks kept a check on prices.

Brent crude futures were up $1.84, or 1.9%, to $96.51 a barrel at 0740 GMT. The contract is headed for a weekly climb of more than 0.5%.

U.S. West Texas Intermediate (WTI) crude futures were up $1.94, or 2.2%, at $90.11 a barrel, on course for a weekly gain of more than 2%.

Both contracts rose as the dollar slipped. A weaker dollar boosts oil demand as it makes the commodity cheaper for those holding other currencies.

While demand concerns weighed on the market, supply is still expected to be tight, with Europe's upcoming embargoes on Russian oil starting and a slide in U.S. crude stockpiles.

"The increasingly gloomy macro outlook is providing some strong headwinds to the oil market and without the supply cuts announced by OPEC+ back in October, we would likely have been trading at much lower levels," said Warren Patterson, ING's Head of Commodities Strategy.

The OPEC+ cuts have provided some stability to the market in the short term, though this is likely to change once the EU's ban on Russian oil comes into force next month for crude and in February for refined products, he added.

Fears of a recession in the United States, the world's biggest oil consumer, grew on Thursday after Federal Reserve Chairman Jerome Powell said it was "very premature" to be thinking about pausing interest rate hikes.

"The spectre of further rate hikes dimmed hopes of a pick-up in demand," ANZ Research analysts said in a note.

The Bank of England warned on Thursday that it thinks Britain has entered a recession and the economy might not grow for another two years.

ANZ analysts pointed to signs of weaker demand in Europe and the United States with people driving less and Amazon warning of weaker sales, which could dampen demand for distillate.

Underscoring demand concerns, Saudi Arabia lowered December official selling prices (OSPs) for its flagship Arab Light crude to Asia by 40 cents to a premium of $5.45 a barrel versus the Oman/Dubai average.

The cut was in line with trade sources' forecasts, which were based on a weaker outlook for Chinese demand.

China stuck to its strict COVID-19 curbs as cases rose on Thursday to their highest since August.

  • GalleryWorldEXCLUSIVE G7 coalition has agreed to set fixed price for Russian oil -sources, article with gallery10:35 AM UTC
  • RefiningU.S. sells last batch of emergency reserve oil from historic release, article with imageNovember 3, 2022
  • Exploration & ProductionEXCLUSIVE Trinidad asks U.S. to allow Venezuelan gas imports for LNG plant, article with image11:17 AM UTC
  • BusinessChina says U.S. has 'no right' to interfere in Hamburg port deal, article with imageNovember 3, 2022

Source reuters.com

Related posts

Airlines using Mexico City hub agree to temporary 15% cut in flights

Cynthia Danforth

EU expects to be ready for Russia oil price cap Dec. 5 start – officials

Cynthia Danforth

UK’s Channel 4 explores non-profit trust ownership, The Telegraph reports

Cynthia Danforth

Leave a Comment