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Oil Futures Settle Higher On Supply Concerns

Crude oil prices settled higher on Thursday on concerns about tight supplies amid geopolitical tensions.

Expectations of a jump in demand from China supported oil prices. According to analysts at UBS, a few refineries in China, including private player Zhejiang Petrochemicals, are considering increasing utilization by up to 10% m/m in October amid stronger demand domestically.

Russian President Vladimir Putin's decision to call up 300,000 reservists to fight in Ukraine, backing up a plan to annex parts of the country, also added to geopolitical concerns.

The Russian leader also hinted at using nuclear weapons, accusing the West of trying to "weaken, divide and ultimately destroy our country."

Russia's decision has raised concerns that an escalation of the war in Ukraine could significantly hurt oil supply.

However, oil's upside was limited as sharp interest rate hikes by central banks, including the Federal Reserve, the Bank of England and the European Central Bank, have raised concerns about a recession that could result in a drop in demand for oil.

West Texas Intermediate Crude oil futures for November ended higher by $0.55 or about 0.7% at $83.49 a barrel, coming off a high of $86.00 a barrel.

Brent crude futures were up $0.55 or 0.61% at $90.38 a barrel a little while ago.

A Bloomberg report said Russian oil output is set to fall to 490 million tons in 2023, which represents a decrease of around 6% from the previous estimate of 520-525 million tons in 2022.

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