By Anadolu Agency
August 30, 2024 3:39 pmOil prices rose during the week ending Aug. 30 due to a decrease in US crude oil inventories, growing expectations of interest rate cuts by the US Federal Reserve, a halt in oil output and exports in Libya, and rising tensions in the Middle East.
The International benchmark Brent crude traded at $79.07 per barrel at 1.54 p.m. local time (1054 GMT) on Friday, up by around 0.06% relative to the closing price of $79.02 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, traded at $75.97 a barrel at the same time on Friday, an increase of about 1.52% from last Friday’s session, which closed at $74.83 per barrel.
Oil prices are driven by global supply concerns, including a lower-than-expected draw in US crude oil stocks, the shutdown of oil fields in Libya, and ongoing attacks on energy infrastructure between Russia and Ukraine.
The American Petroleum Institute (API) data showed a 3.4 million barrel fall in US crude oil inventories, against the market prediction of a 3 million barrel draw. The fall in the US commercial crude oil reserves supported upward price movements by reflecting market perceptions of a stronger domestic demand.
Meanwhile, a potential interest rate cut decision from the Fed continues to impact oil prices.
Fed Chairman Jerome Powell last week signaled an interest rate cut, saying the ‘time has come’ for an adjustment in monetary policy.
‘The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,’ Powell told the annual Jackson Hole symposium in the US state of Wyoming.
While it is widely anticipated that the Fed will implement a 100 basis point interest rate cut by the end of the year, it is predicted that a 50 basis point reduction might be made during the November meeting.
Concern over potential supply shortages due to the suspension of oil production in Libya supported upward price movements.
Libya’s National Oil Corp. said Thursday that the losses incurred due to a decision by the eastern government to shut down oil and gas operations in the country have exceeded $120 million over the course of three days.
In a statement, the corporation, which controls the country’s oil resources, noted a decline in oil production rates from nearly 1,3 million barrels per day on Monday (the day the shutdown began) to 591,024 barrels on Wednesday.
On Monday, the government appointed by the House of Representatives in the east, led by Osama Hamad, declared a state of ‘force majeure’ on the entire oil sector and halted production and exports from oil fields and ports in response to the ‘storming’ of the Central Bank of Libya’s headquarters in the capital, Tripoli, by a committee tasked with transferring management from the current governor, Al-Siddiq Al-Kabir, to a new administration.
Libya, one of the major members of the Organization of the Petroleum Exporting Countries (OPEC) group, produced 1.18 million barrels of crude oil per day in July.
Conflict between Russia and Ukraine lent upward support to oil prices by fueling market players’ supply fears as both countries continue to target critical energy infrastructures.
Last week, Russia claimed that Ukraine launched a drone attack on the Kursk Nuclear Power Plant, with the drone being shot down near a spent nuclear fuel storage facility. Russian authorities on Wednesday declared that they introduced restrictions on entries into a town near the Kursk Nuclear Power Plant.
Meanwhile, The UN on Thursday welcomed reports of rescue operations for the Greek-flagged oil tanker MV Sounion in the Red Sea after Yemen’s Houthi group agreed to allow access to the damaged vessel.
‘We are encouraged by reports that the salvage operations for the tanker can proceed with tugboats and rescue ships to access the incident areas,’ UN spokesman Stephane Dujarric told reporters during a news conference.
The tanker, which has been anchored in Red Sea waters, had its crew evacuated due to fires reported on board.
The Red Sea is one of the world’s most frequently used sea routes for oil and fuel shipments.
The Houthis have been targeting Israeli-linked cargo ships in the Red Sea and Gulf of Aden in solidarity with the Gaza Strip, which has been under an Israeli onslaught since Oct. 7 last year.
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