MARKETS WRAP

OIL RISES ON US FUEL DATA

OIL PRICES rose yesterday as robust US fuel consumption data and expected falls in Russian supply later in the year offset concerns that a possible recession in developed economies could undercut demand.

Brent crude futures climbed $1.80, or 1.9 percent, to $95.45 (R1 575) a barrel by 4.14pm. US crude futures gained $1.56, or 1.8 percent, to $89.67 a barrel.

Prices rose more than 1 percent during the previous session, although Brent at one point fell to its lowest level since February, as signs of a slowdown mounted in some places.

British consumer price inflation topped 10 percent in July, its highest since February 1982, intensifying a squeeze on households, while in China Covid-19 lockdowns and fuel export controls curbed demand.

Supporting prices, US crude stocks fell by 7.1 million barrels in the week to August 12, Energy Information Administration (EIA) data showed, against expectations for a 275 000-barrel decline, as exports hit 5 million barrels per day (bpd), the highest on record.

Bans by the EU on Russian exports could dramatically tighten supply when curbs to seaborne crude and products imports into the bloc ramp up in the coming months and drive up prices, analysts warn.

“The EU embargoes will force Russia to shut in around 1.6 million barrels per day of output by year-end, rising to 2 million bpd in 2023,” consultancy BCA research said in a note.

“EU embargoes on Russian oil imports will significantly tighten markets and lift Brent to $119 a barrel by year-end.”

Russia, however, forecasts rising output and exports until the end of 2025.

The market is also awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports. I Reuters