On Friday, oil prices increased as worries that a Russian restriction on gasoline exports may restrict global supply overcame worries that additional increases in U.S. interest rates might hurt demand. However, they were still on track to post their first weekly loss in four weeks.
By 3:50 PM GMT, Brent futures had risen 50 cents, or 0.5%, to $93.80 per barrel, while WTI futures had risen 63 cents, or 0.7%, to $90.26 per barrel in the United States.
Both benchmarks were on course for a slight weekly decline after rising more than 10% in the previous three weeks due to worries about a shortage of oil on the world market as OPEC+ continues to cut production.
Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd., stated that trading “remained choppy amid a tug-of-war between supply fears, which were strengthened by a Russian ban on fuel exports, and worries over slower demand due to tighter monetary policies in the United States and Europe.”
“Investors’ attention will shift moving forward to whether the OPEC+ production cuts are implemented as promised and whether the increase in interest rates will reduce demand,” he added, forecasting WTI to trade in a range of about $90-$95.
In order to stabilize the domestic fuel market, Russia temporarily restricted gasoline and diesel exports to any nations outside of a circle of four former Soviet states, the government announced on Thursday.
The shortage, which would force Russian fuel consumers to shop elsewhere, led to an almost 5% increase in heating oil futures on Thursday.
“Crude oil recovered from a session low when Russia forbade the shipment of gasoline- and diesel-containing products. Following the hawkish Fed decision on Thursday, the action “reversed a downside movement in crude markets,” wrote Tina Teng, an analyst at CMC Markets, in a note.
However, growing concerns about a Eurozone recession might keep oil prices under pressure.
On Wednesday, the U.S. Federal Reserve kept interest rates unchanged but sharpened its hawkish tone by forecasting an increase of 0.25 percentage points to 5.50–5.75% by year’s end.
The U.S. dollar rose to its highest level since early March as a result, making oil and other commodities more expensive for consumers using foreign currencies. This fueled concerns that higher rates could stifle economic development and fuel demand.
After years of rate increases, the Bank of England followed the Fed’s lead on Thursday and maintained interest rates steady, but it added that it was not taking the recent drop in inflation for granted.
At its upcoming policy meeting, the European Central Bank (ECB) will probably keep interest rates unchanged, according to a member of the governing council.