Stocksak: Oil prices up; China’s hopes outweigh recession concern

© Stocksak. FILE PHOTO – Crude oil storage tanks can be seen from above at Cushing oil hub in Cushing, Oklahoma on March 24, 2016. REUTERS/Nick Oxford/File Photograph

By Laila Kearney

NEW YORK, Stocksak -Oil prices rose Friday on the back of higher Chinese demand and a weakening U.S. Dollar. This was in contrast to concerns about a global downturn and the impact that interest rate increases on fuel use.

Federal Reserve Bank of Philadelphia President Patrick Harker stated that the U.S. Federal Reserve is trying slow the economy to fight inflation and will keep raising its short term rate target. Harker made these comments in comments that were weighed on oil.

But crude is gaining support from a looming European Union ban on Russian oil, as well as the recent 2 million-barrels-per-day output cut agreed by the Organization of the Petroleum Exporting Countries and allies including Russia, known as OPEC+.

$93.50 per barrel, an increase of $1.12, or 1.2%. U.S. West Texas Intermediate crude Oil (WTI) settled for $85.05 a barrel, an increase of 54 cents and 0.6%. Both benchmarks were down more than a penny during the session.

Brent rose by 2% in the week, and WTI fell by 0.7%.

Before the WTI’s November contract expired, traders were trying to squaring up positions in anticipation of the weekend. This increased volatility.

John Kilduff from Again Capital LLC in New York stated, “The bias is for the weekend to be on the long side.”

Swings in U.S. dollars, which usually moves inversely to oil prices, add to choppy trade. [USD/]

After a report that Fed officials had signalled greater unease about big interest rates rises to combat inflation, the dollar fell against a basket currencies.

Brent was close to $147 in March’s all-time high. It was on track for a 0.8% weekly gain, while heading for a loss around 1.5%. Both benchmarks fell in the week before.

Saudi Arabia’s energy Minister said that the producer group was doing a good work to ensure stable and long-term oil markets.

Oil gained Thursday morning after Bloomberg News reported Beijing was considering reducing the quarantine period to seven days, from 10 days. Beijing has not yet confirmed this.

Stephen Brennock, an oil broker PVM, stated that the market’s rally following the report was due to “the knee-jerk price movement providing a useful glimpse at what to expect once more restrictive measures are lifted.”

China, the world’s largest crude oil importer, has adhered to COVID-19 limits this year. This has had a major impact on business and economic activity as well as reducing fuel consumption.

Baker Hughes Co, a US oil and gas services firm, reported that the U.S. oil rig count, which is an indicator of future output, rose by two to 771 in a week to Oct. 21. [RIG/U]

U.S. oil production rose to 612 this week, their highest level since March 2020. Meanwhile, gas rigs remained the same at 157.

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Stocksak Editorial

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