Oil fell $2 a barrel on Friday and closed the week lower as traders worried that future US interest rate hikes could put pressure on demand and were nervous about signs of ample crude and fuel supplies.
On Thursday, two Fed officials warned that additional increases in borrowing costs are essential to reining in inflation. The sentiment has boosted the US dollar, making oil more expensive for holders of other currencies. Various signs of ample supply also weighed on the market.
Vedomosti newspaper reported that Russian oil producers expect to maintain their current crude oil export volumes despite the government’s plan to cut oil production in March.
U.S. crude inventories rose in the weekly supply report. The latest snapshot of US inventories released on Wednesday showed crude inventories rose 16.3 million barrels to 471.4 million barrels for the week of February 10, the highest level since June 2021.
Refineries may extend the turnaround season as long as they can as oil storage is at its peak in 19 months.
According to Baker Hughes Co, the number of oil and gas rigs, an early indicator of future production, fell to 760 in the week through February 17. Despite the rig drop this week, Baker Hughes said the total number is still up 115, or 18%, from this time last year.
The International Energy Agency (IEA) and Organization of Petroleum Exporting Countries’ forecasts for this year’s global oil demand growth were supported by the expectation of greater demand from China.
Saudi Arabia’s energy minister said the current agreement to reduce OPEC+’s including Russia, oil production targets by 2 million barrels per day will remain stable until the end of the year and remains cautious about China.
