Oil set for 3rd weekly gain
Oil refineries have already warned that they will shut down in the absence of a new policy as they are suffering huge losses on furnace oil exports. photo: FILE
Oil prices hit a 10-month high on Friday and were set to post a third weekly gain as supply tightness spearheaded by Saudi Arabian production cuts combined with optimism around Chinese demand to lift crude.
By 1615 GMT, US West Texas Intermediate futures were up 62 cents, or 0.7%, to $90.78 a barrel and Brent crude futures were up 21 cents, or 0.2%, to $93.91 a barrel. Both benchmarks hit their highest since November 2022 earlier in the session, and are up about 4% for the week.
Oil prices are also on track for their biggest quarterly increase since the Russia-Ukraine conflict.
Supply concerns continue to be a driving force for prices since Saudi Arabia and Russia this month announced an extension of their combined 1.3 million barrel per day supply cuts to the end of this year, said Fiona Cincotta, analyst at City Index.
Better-than-expected industrial output and retail sales data from China have also given a boost to oil prices this week, with the country’s economic conditions considered crucial to oil demand for the rest of this year, Cincotta added.
Data on Friday showed Chinese oil refinery processing rose by nearly a fifth from a year earlier as processors kept run rates high to capitalise on high global demand for oil products.
Expectations of moderating US oil output have also boosted prices in recent weeks, Third Bridge analyst Peter McNally said.
“Supply growth from the US appears to be limited as producers there have taken drilling activity down nearly 20% from last year’s peak,” McNally noted.
Oilfield services firm Baker Hughes will post its weekly US rig count data on Friday, considered a key indicator of future output.
Published in The Express Tribune, September 16th, 2023.
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