Oil prices rose as concerns that Russia’s ban on fuel exports could tighten global supplies outpaced fears that U.S. interest rate hikes would hurt demand, but they are still heading for their first weekly loss in four weeks.
Brent futures were up 46 cents, or 0.5%, at $93.76 a barrel by 0630 GMT, while West Texas Intermediate crude (WTI) futures were up 65 cents, or 0.7%, at $90.28 a barrel.
Both indicators are on track for a small weekly decline after rising more than 10% in the previous three weeks on concerns about tight global supply as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) maintain production cuts.
Trade is fluctuating amid a tug-of-war between supply fears, bolstered by Russia’s ban on fuel exports, and concerns that demand will slow due to tight monetary policies in the United States and Europe.
Investors are focused on whether OPEC+ production cuts are implemented as promised and whether the increase in interest rates will reduce demand, with the expectation that WTI will trade around $90-95.
Russia has temporarily banned gasoline and diesel exports to all countries except four former Soviet states with immediate effect to stabilize the domestic fuel market, the government said on Thursday.
The practice, which forces Russia’s fuel buyers to shop elsewhere, caused heating oil futures to rise nearly 5% on Thursday.
Crude oil rose from a one-session low after Russia banned diesel exports, including gasoline. This action reversed the downward move in crude oil markets following the Fed’s hawkish decision.
However, growing fears of a recession in the Eurozone may continue to pressure oil prices.
The US Federal Reserve kept interest rates on Wednesday but strengthened its hawkish stance, implying a quarter-point of increase 5.50%-5.75% by the end of the year.
This has raised fears that higher interest rates could hurt economic growth and increase demand, causing the US dollar to rise to its highest level since early March, making oil and other commodities more expensive for buyers using other currencies.
The Bank of England imitated the Fed and kept interest rates steady on Thursday after a long streak of increases, but said the recent decline in inflation was not taken for granted.
One of a European Central Bank (ECB) governing council member said the central bank will likely keep interest rates steady at its next policy meeting.