Crude Oil Higher due to Global Demand Optimism by

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By Peter Nurse — Oil prices rose Thursday, adding to the previous session’s sharp gains, boosted by optimism generated by record exports as well as doubts about the effectiveness of the proposed price cap on Russian oil.

U.S. crude futures were 1.7% higher at $89.42 per barrel (13:10 GMT) while the contract rose 1.2%, to $94.91. 

Both contracts gained around 3 percent last session, putting them on track for a weekly gain. Data released Wednesday by the Energy Information Administration showed that crude oil exports from the United States grew to a record high of 5.1 million barrels per day. This suggests that global demand is resilient despite rising interest rates.

“Weekly trade flows may be less accurate and do fluctuate widely, but it is no surprise that the U.S. is emerging as the barrel of last resort as Europe pivots away from Russia,” analysts at Citi said, in a note.

This positive tone continued Thursday, boosted by the news that the U.S. economy, the world’s largest, rebounded from six months of contraction in the third quarter, as grew by 2.6% on a year-on-year basis. 

This was a rebound from the declines of 0.6% & 1.6% in the first & second quarters, respectively. It also pointed to economic resilience within the U.S., which is the largest consumer of crude oil in the world, despite aggressive Federal Reserve interest rate increases.

While U.S. officials and Western officials are believed to be finalizing plans in order to impose a cap upon Russian oil prices, there are doubts about how effective this policy will be.

Bloomberg News reported that officials were being forced by Bloomberg to reduce plans for price caps, with fewer countries participating and a higher price.

This follows a warning issued by the World Bank about the need for active participation from emerging market economies in order for any plan to be successful.

An IEA report that forecasts a peak in global fossil fuel demand within a decade, citing the energy crisis in Ukraine as a catalyst for the transition to green energy has little impact on sentiment.

Corporate news: Europe’s largest energy companies, Shell (LON) and TotalEnergies SE(EPA:), reported profits of over $9 billion for the third quarter. This was a result of high fuel prices.

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