Oil prices held steady after a decline in initial hours on Tuesday, September 26, as investors weighed demand concerns stemming from an uncertain economic outlook against expectations of tighter supply for the rest of this year.
Earlier this month, oil producers Saudi Arabia and Russia extended their voluntary oil output cuts of a combined 1.3 million barrels per day (bpd) to the end of the year which resulted in a sharp surge in international crude prices – reaching a 10-month high peak.
These are on top of the April cuts agreed by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) running to the end of 2024. Ending the week, oil gained almost 1 per cent to a nine-month high on Friday on rising US diesel futures and worries about tighter supplies.
Brent crude futures were lower by 7 cents, or 0.08 per cent, at $93.22 a barrel, while US West Texas Intermediate crude futures were trading 5 cents higher, or 0.06 per cent, at $89.73, according to news agency Reuters.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a October 19 expiry, were last trading 0.52 per cent higher at ₹7,508 per bbl, having swung between ₹7,352 and ₹7,520 per bbl during the session so far, against a previous close of ₹7,469 per barrel.
What’s weighing on crude oil prices?
-The US dollar hit a 10-month high today, as higher bond yields attracted investors towards the greenback. As the major currency used for oil pricing, a stronger dollar typically weighs on oil demand as it becomes more expensive for importers relative to their local currency.
-The world’s top central banks, the US Federal Reserve and the European Central Bank, have over recent days reiterated their commitment to fight inflation, signalling tight monetary policy may persist longer than previously anticipated. Higher interest rates slow economic growth, which curbs oil demand.
Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights!” Click Here
-Rating agency Moody’s said on Monday that a US government shutdown would harm the country’s credit, a warning coming one month after Fitch downgraded the United States by one notch on the back of a debt ceiling crisis.
-Oil prices were mostly flat on Monday, after Russia softened its gasoline and diesel export ban. Exports of products already accepted by Russian Railways and Transneft will be able to go ahead, while higher-sulphur gasoil and fuel used for bunkering will be exempt from the ban.
-OPEC has revised down the global oil demand for 2023 by 1 lakh barrels per day to 29.2 million barrels per day (bpd) – which is 8 lakh bpd higher than 2022. The oil cartel has also cut the 2024 demand outlook by 1 lakh bpd to 30 mbpd.
-Global oil markets face a supply shortfall of more than 3 mbpd in the next quarter — potentially the biggest deficit in more than a decade — as a result of Saudi Arabia’s extended output cuts.
“Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!
Download The Mint News App to get Daily Market Updates & Live Business News.
Updated: 26 Sep 2023, 08:30 PM IST