Oil prices rose on Monday as investors focused on a tighter supply outlook after Moscow temporarily banned fuel exports and were wary of further interest rate hikes that could dampen demand.
Brent crude futures rose 69 cents, or 0.7%, to $93.96 a barrel at 06:46 GMT after closing 3 cents lower on Friday.
West Texas Intermediate (WTI) crude oil futures extended their gains for a second session, rising 54 cents, or 0.6%, to trade at $90.57 a barrel.
Crude oil prices started the week well as Russia’s temporary ban on diesel and gasoline exports offset an already tight market with the Fed’s hawkish message that rates will remain high for longer.
Prices had risen more than 10% in the previous three weeks on forecasts of a wide crude supply gap in the fourth quarter after Saudi Arabia and Russia extended further supply cuts until the end of the year.
Both contracts fell last week, ending a three-week winning streak after the Federal Reserve’s hawkish stance rattled global financial sectors and raised concerns about oil demand. However, Russia’s move on Thursday afternoon supported the prices.
Towards the end of last week, Moscow temporarily banned gasoline and diesel exports to most countries in an effort to stabilize the domestic market, raising concerns that product supplies, especially for heating oil, will be low as the Northern Hemisphere enters winter.
News of Russia’s fuel export ban appears to be priced in for now, but the global oil supply squeeze is solidifying its foundations, with an intense focus on diesel shortages and fears that unexpected LNG supply disruptions, particularly in European markets, are likely to continue.
The number of oil rigs operating in the U.S. fell by eight last week to 507, the lowest level since February 2022 despite higher prices, according to Baker Hughes’ report on Friday.
Expecting better economic data from China, the world’s largest crude oil importer, this week increases confidence. However, analysts pointed out that oil prices’ November 2022 highs, which were hit last week, are a technical resistance level.
China’s manufacturing sector is expected to return to expansion mode in September and the purchasing manufacturing index is expected to rise above 50 for the first time since March.
In a positive sign, China’s oil demand rose 0.3 million barrels per day (bpd) last week to 16.3 million bpd, partly due to a gradual recovery in demand for jet fuel for international flights.