Oil prices increased on Monday as traders concentrated on a tighter supply outlook following Moscow’s temporary restriction on gasoline exports while avoiding any interest rate increases that may stifle demand. After ending the previous trading day 3 cents down, Brent crude futures increased 48 cents, or 0.5%, to $93.75 a barrel. U.S. West Texas Intermediate oil futures maintained their gains for a second straight session, rising 50 cents or 0.6% to trade at $90.53 per barrel.
“Crude oil prices have started the week on the front foot, as the market continues to digest Russia’s temporary ban on diesel and petrol exports, into an already tight market, offset with the Fed’s hawkish message that rates will stay higher for longer,” said IG Markets analyst. After Saudi Arabia and Russia extended additional supply restrictions until the end of the year, projections for a significant shortfall in crude supply in the fourth quarter drove up prices by more than 10% over the preceding three weeks.
Despite increased prices, the number of working oil rigs in the United States dropped by eight to 507 last week, the lowest number since February 2022, according to a Baker Hughes weekly report released on Friday. Sentiment was also uplifted by expectations of improved economic statistics this week from China, the world’s top petroleum importer. Analysts cautioned that the recent highs for November 2022 in oil prices will encounter technical resistance.
According to Goldman Sachs analysts, China’s manufacturing sector is anticipated to resume expansion in September, with the buying manufacturing index predicted to surpass 50 for the first time since March. Positively, they continued, China’s oil demand rose 0.3 million barrels per day to 16.3 million bpd last week, in part because of a modest improvement in the demand for jet fuel for foreign flights.
