Due to a reduction in the worldwide supply of petroleum, oil prices increased in early trade

4 Oct 2023 , 09:58 AM

Prior to a panel meeting of OPEC+ ministers, tightening global crude supplies helped drive up the price of oil in early Asian trade on Wednesday.

Brent crude oil futures had increased by 6 cents to $90.98 per barrel, while WTI had increased by 11 cents to $89.34.

Following the extension of output restrictions by Saudi Arabia and Russia through the end of the year, the Organisation of the Petroleum Exporting Countries and Allies, or OPEC+, is anticipated to maintain its current output strategy when it meets on Wednesday.

A Reuters survey predicts that Saudi Arabia will increase the official selling price of Arab Light oil to Asia for a fifth consecutive month in November.

The gasoline export embargo that Russia instituted last month will continue indefinitely in order to stabilise prices and address shortages on the domestic market, according to Deputy Prime Minister Alexander Novak, who was quoted by Interfax as saying this.

According to market reports citing American Petroleum Institute statistics on Tuesday, the U.S. supply of crude oil decreased by around 4.2 million barrels in the week ending September 29.

On Wednesday, the U.S. government must release data on stockpiles. Crude inventories decreased by around 500,000 barrels in the week leading up to September 29 according to an average estimate of eight analysts surveyed by Reuters. 

The U.S. dollar’s strength has been putting pressure on prices recently. On Tuesday, it reached a 10-month high versus a basket of global rivals after U.S. job openings data revealed a still-tight labour market that may lead the Federal Reserve to hike interest rates next month.

Oil becomes more expensive for owners of other currencies due to higher interest rates and a stronger dollar, which could reduce demand for oil.

Investors are also interested in Washington’s political unrest. For the first time in history, Republicans in the U.S. House of Representatives dismissed their leader on Tuesday as party infighting sent Congress further into disarray only days after it nearly avoided a government shutdown.

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