Oil rises as supply constraints are once again in the spotlight

25 Sep 2023 , 11:01 AM

 Oil prices increased on Monday as traders concentrated on a tighter supply outlook following Moscow’s temporary restriction on gasoline exports while avoiding any interest rate increases that may stifle demand.

After closing 3 cents lower on Friday, Brent crude futures increased 48 cents, or 0.5%, to $93.75 a barrel.

U.S. West Texas Intermediate oil futures maintained their gains for a second straight session, rising 50 cents or 0.6% to trade at $90.53 per barrel.

Last week, both contracts ended a three-week winning streak by falling after the Federal Reserve’s hawkish stance shook the world’s financial markets and stoked worries about oil demand.

Prices had increased by almost 10% over the previous three weeks on expectations of a significant shortfall in crude supply in the fourth quarter as a result of Saudi Arabia and Russia extending their production curbs until the end of the year.

In an effort to stabilise the home market, Moscow temporarily outlawed the export of petrol and diesel to the majority of nations last week. This stoked fears of a shortage of goods, particularly of heating oil as the northern hemisphere enters winter.

Despite increased prices, there were 507 active oil rigs in the US last week, the lowest level since February 2022, according to a Baker Hughes survey released on Friday.

The world’s top importer of crude oil, China, is expected to release better economic data this week, which helped improved mood. Analysts warned that the highs reached in November 2022 last week would likely find technical resistance.

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