Oil rose slightly on volatile trade on Friday, and prices remained flat throughout the week, bolstered by expectations of a decline in Russian exports, but pressed by rising inventories in the US and concerns over global economic activity.
Brent crude futures were up 95 cents, or 1.2%, at $83.16 a barrel. West Texas Intermediate crude futures (WTI) rose 93 cents, or 1.2%, to $76.32 a barrel. Earlier, both dropped more than $1 a barrel.
Low trading volumes contributed to the volatility, with Brent trading at 58% and WTI trading at 90% from previous session levels.
On the anniversary of the Russian invasion of Ukraine, reference Brent crude was about 15% lower than a year ago. On March 8, 2022, it reached a 14-year high of about $128 per barrel.
Both indicators rose nearly 2% in the previous session, amid Russia’s plans to cut oil exports from western ports by up to 25% in March.
The market appears to be well supplied with the highest US oil stocks since May 2021, according to data from the US Energy Information Administration (EIA).
Despite rising US oil inventories, Baker Hughes Co said as an indication of future supply, US oil rigs fell seven to 600 this week, with the total number up 103 rigs, or 15.8%, from this time last year.
Indications of Russian crude and refined products being stockpiled in floating tankers also point to increased supply.
As the headwinds in global growth get stronger, short-term prices are likely to slide down to $70s rather than rise, even if the excess stocks exacerbated by the overflow of Russian oil are dissipated.
Also, the Organization of the Petroleum Exporting Countries (OPEC) will not hesitate to cut production to limit the declines in oil prices.
Minutes of the most recent US Federal Reserve meeting showed that the majority of officials remained hawkish on inflation and tight labor market conditions, pointing to further monetary tightening.
The prospect of further interest rate hikes supported the dollar index, which was set for a fourth straight week of gains. The index is currently up about 2.5% for the month.
A solid dollar makes commodities priced in US dollars more expensive for those holding other currencies.
While constrained Russian supply is certainly a bullish concern, the complex-wide price action this month sent a strong message that rising US interest rates, further bolstered by Fed minutes, will be a major hurdle to sustained oil price strength.
