After initial gains on a tighter supply forecast and volatile trading on Monday, oil prices moved lower as Russia lifted its gasoline embargo. Still, investors watched high interest rates that may reduce demand.
By 10:33 a.m. EDT (1433 GMT), Brent oil futures were down 30 cents at $92.97 per barrel. At $89.45, U.S. West Texas Intermediate crude had decreased by 58 cents.
According to a government document released on Monday, Russia has authorized several adjustments to its prohibition on the export of fuel, including the relaxation of the restrictions on diesel with a high sulfur content and petroleum used as bunkering for particular boats.
All forms of gasoline and premium diesel are still prohibited, as declared last Thursday. With the Fed’s hawkish message that interest rates would remain higher for longer, the market is still processing Russia’s temporary restriction on exporting diesel and gasoline into an already constrained market, according to IG Markets analyst Tony Sycamore.
Last week, crude prices dropped as a hawkish Federal Reserve shook up the world’s financial markets, prompting worries about the oil demand. After Saudi Arabia and Russia curtailed supplies by extending production cutbacks through the year’s end, a three-week rise of more than 10% was ended.
To stabilize the domestic market, Moscow temporarily banned the shipment of gasoline and diesel to most nations last week, stoking fears of a shortage of goods as the Northern Hemisphere enters winter.
The U.S. dollar index rose on Monday to its highest level since November 2022, which also weighed on oil prices. Oil purchased in dollars becomes more expensive for holders of other currencies, reducing demand.
Because of the dollar’s surge, we “seem to have a risk-off sentiment,” according to Price Futures Group analyst Phil Flynn.
Despite increased prices, the number of working oil rigs in the United States dropped by eight to 507 last week, the lowest level since February 2022, according to a Baker Hughes weekly report released on Friday.
The availability of refining capacity will be reduced by 324,000 barrels per day (bpd) for the week ending September 29, according to research firm IIR Energy, which would further exacerbate supply shortages.
The week ending October 6 is projected to increase offline capacity to 1.9 million bpd, according to IIR.
According to the official IRNA news agency, a gas leak on Monday resulted in an explosion at Iran’s southern refinery in Bandar Abbas. View More
The world’s top importer of crude oil, China, is expected to release better economic statistics this week, which improved optimism. Analysts cautioned, however, that technical resistance exists near the recent highs for November 2022 for oil prices.
According to Goldman Sachs analysts, China’s manufacturing sector is anticipated to grow in September, with the buying manufacturing index predicted to surpass 50 for the first time since March.
