Doha: Oil prices held steady on Friday but closed the week lower on profit-taking and as markets weighed supply concerns stemming from Russia’s fuel export ban against demand woes from future rate hikes. Brent futures settled 3 cents lower at $93.27 a barrel. It fell 0.3% in the week, breaking a three week streak of gains.
US West Texas Intermediate crude (WTI) futures rose 40 cents to $90.03 a barrel, as US oil rig counts fell last week. The benchmark fell 0.03% for the week. Investors are anticipating a slack in demand coming into October as refineries go into maintenance and as a higher interest rate is going to further pressure markets.
US Federal Reserve officials warned of further rate hikes, even after voting to hold the benchmark federal funds rate steady at a meeting last week. Higher interest rates increase borrowing costs, which could slow economic growth and reduce oil demand. Meanwhile, Russia’s temporary ban on exports of gasoline and diesel to most countries was expected to tighten supplies.
The ban will bring new uncertainty into an already tight global refined product supply picture and the prospect that the impacted countries will be seeking to bid up cargoes from alternative suppliers.
Asian spot liquefied natural gas (LNG) prices rose $1 last week due to buying activity by China and India, easing inventory levels in Japan and higher oil prices. The average LNG price rose to $14 per mmBtu from $13 the previous week. Japan LNG inventories held by major Japanese power utilities fell to 1.62 million tons as of Sept. 17, lower than the 5-year average for the period.
China’s Unipec, the trading arm of top Asian refiner Sinopec, bought over 30 LNG cargoes via a tender for deliveries from October 2023 to the end of 2024 to meet winter demand and boost its trading supply pool. Higher oil prices may set a temporary floor for LNG prices despite bearish pressure from the strike resolution at Chevron’s facilities in Australia, analysts said.
