This aerial photo shows the Enping 15-1 oil platform 200 km southwest of Shenzhen, south China, May 31, 2023.
Mao Siqian | Xinhua News Agency | Getty Images
Oil prices settled lower after choppy trading on Thursday, rising as much as $1 a barrel after a Russian ban on fuel exports snatched the focus from Western economic headwinds that had pushed prices down $1 a barrel early in the session.
Brent futures for November delivery settled down 23 cents to $93.30 a barrel, while U.S. West Texas Intermediate crude settled down 3 cents to $89.63. Both benchmarks had risen and fallen more than $1 earlier on Thursday.
Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilize the domestic fuel market, the government said on Thursday.
The shortfall, which will force Russia’s fuel buyers to shop elsewhere, caused heating oil futures to rise by nearly 5% on Thursday.
“As diesel and gasoil likely advance to new highs, they will be positioned to provide some upward pull on the crude markets,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
The Fed on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75% by year-end.
That could dampen economic growth and overall fuel demand. The U.S. dollar surged to its highest since early March, making oil and other commodities more expensive for buyers using other currencies.
U.S. unemployment benefit claims dropped to an eight-month low last week, the U.S. Labor Department reported. John Kilduff, partner at Again Capital LLC in New York, called this another factor that would encourage high interest rates.
“The Fed stance and a strong labor market has driven equities and commodities lower, pressuring oil,” said Kilduff.
The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.
Norway’s central bank raised its benchmark interest rate on Thursday and, in a surprise move, said it would probably hike again in December.
Oil prices remained supported by concern about tight supply globally entering the fourth quarter. U.S. crude stocks at Cushing, the WTI delivery hub, are at their lowest since July 2022 as the Organization of the Petroleum Exporting Countries and allies maintain production cuts.