Oil is firmer as worry about supply cancels out demand fear

London — Oil prices rose on Friday as renewed global supply concerns from Russia’s fuel export ban counteracted demand fears driven by macroeconomic headwinds and high interest rates.

Brent futures were up 52c, or 0.56%, at $93.82 a barrel by 9.33am GMT, while US West Texas Intermediate crude (WTI) futures rose by 73c, or 0.81%, to $90.36 a barrel.

Both benchmarks were on track for a small weekly drop after gaining more than 10% in the previous three weeks amid concerns about tight global supply as oil cartel Opec and allies (Opec+) maintain production cuts.

“Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the US and Europe,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.

Russia’s Transneft suspended deliveries of diesel to the key Baltic and Black Sea terminals of Primorsk and Novorossiysk on Friday, state media agency Tass said.

Russia temporarily banned exports of petrol and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilise the domestic fuel market, the government said on Thursday.

But macroeconomic headwinds continue to weigh on oil demand sentiment.

“It is signals on the demand side that are mainly likely to affect oil prices in the short term,” Commerzbank analysts said in a note.

The eurozone economy is likely to contract in the third quarter, according to purchasing managers index (PMI) data released on Friday.

A contraction in UK economic activity deepened further in September compared with August, additional PMI data showed.

The US Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, buoying fears that higher rates could dampen economic growth.

HSBC on Friday raised its Brent price forecast to $90 a barrel for the fourth quarter and $82.50 for 2024 due to record Chinese demand and a prediction that Saudi Arabia’s voluntary production cuts will stay in place until the second quarter of 2024.

Reuters