Oil prices lift, due in part to possible lower exports from Russia
London — Oil prices extended gains for a second session on Friday as the prospect of lower exports from Russia offset rising inventories in the US and concerns over global economic activity.
Brent crude futures rose 89c, or 1.1%, to $83.10 per barrel by 10.42 GMT. On the anniversary of Russia’s invasion of Ukraine, benchmark Brent crude prices were about 14% lower than a year earlier. They hit a 14-year high of nearly $128 a barrel on March 8 2022.
West Texas Intermediate US crude futures (WTI) were up 79c, or 1.05%, to $76.18.
The benchmarks ended about 2% higher in the previous session on Russia’s plans to cut oil exports from its western ports by up to 25% in March, which exceeded its announced production cuts of 500,000 barrels per day.
“Higher-than-expected US crude oil inventories continue to challenge the oil demand outlook, but expectations for lower Russian production have an offsetting impact,” said Yeap Jun Rong, a market strategist at IG.
US inventories are at their highest level since May 2021.
US crude stocks rose by 7.6-million barrels to about 479-million barrels in the week to February 17, data from the US Energy Information Administration said.
And indications that Russian crude and refined products are accumulating on tankers floating at sea weighed further on the supply outlook.
JPMorgan said in a note on Friday that it sees short-term prices more likely to drift lower towards the $70s than rise “as global growth headwinds strengthen and excess “dark” inventory worsened by a flooding of Russian oil is worked off”.
The bank also said it expects Opec to cut production to limit oil price declines.
For the week, oil prices are largely flat, after the previous week’s declines of about 4%, weighed also by concerns about rising interest rates that could strengthen the dollar and curb fuel demand.
Minutes from the latest US Federal Reserve meeting indicated that a majority of officials remained hawkish on inflation and tight labour market conditions, signalling further monetary tightening.
The prospect of further rate hikes supported the dollar index, which was set for a fourth-straight week of gains. The index is now up about 2.5% for the month.
A firm dollar makes commodities priced in the greenback more expensive for holders of other currencies.