Oil edges rise as supply worries eclipse Fed rate stance

Oil rose as traders weighed risks to the supply outlook against commitments from leading central banks to raise interest rates further.

est Texas Intermediate rose towards $94 a barrel, reversing an early decline after rising 2.5 percent last week. In Libya, clashes between militias in the capital left at least 23 dead and stoked fears of more upheaval in the OPEC nation that could threaten oil supplies again as an energy crisis rocks Europe.

Iran, meanwhile, said exchanges with the US over a European Union proposal to revive a nuclear deal would drag on into next month, debunking speculation that a deal paving the way for increased oil flows was imminent.

Crude oil is on course for a third straight monthly decline amid fears global growth will slow as central banks aggressively tighten policy and hit consumption. Federal Reserve Chair Jerome Powell has warned of the need for higher interest rates, while a senior European Central Bank official said there was “little choice” but to carry on even if the region’s economy slides into recession .

To counter the weakness, Saudi Arabia last week raised the possibility that the Organization of Petroleum Exporting Countries and its allies could cut production, with support from other members. Separately, shipments from an export terminal for Kazakh crude oil were disrupted.

“Despite hawkish central banks fueling higher interest rates and a weak economic outlook, oil continues to see upside as supply-side issues keep sentiment bullish,” said James Whistler, Managing Director at Vanir Global Markets Pte in Singapore. “There is impetus for OPEC production cuts, with Congo and Libya supporting Saudi Arabia’s views, while Kazakhstan faces ongoing supply problems.”

Widely observed market time spreads point to growing concerns about near-term tightness. Brent’s prompt spread – the difference between its front month and second month contracts – was $1.75 a barrel in the bullish backwardation structure, compared to 67 cents a week ago.

In a bullish note on commodities, Goldman Sachs Group Inc. said crude oil has room to rise, especially given the scarcity of other energy commodities, including natural gas.

“With oil being the commodity of last choice in times of severe energy shortages, we believe the retreat of the entire oil complex provides an attractive entry point for long-only investing,” wrote analysts including Sabine Schels.

https://www.independent.ie/business/world/oil-edges-higher-as-supply-concerns-eclipse-feds-rate-stance-41944009.html Oil edges rise as supply worries eclipse Fed rate stance

Fry Electronics Team

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