The market remains well supported by a prospect of a fall in Russian exports as the European Union tightens sanctions in a month
Oil prices retreated marginally on Thursday on fears US interest rates will go higher than previously expected. The market was also pressured by renewed concerns that Covid outbreaks will dent demand in China where cases rose to their highest since August. Adding to worries, the Bank of England warned that it thinks the UK economy has entered a recession. The central bank on Thursday raised interest rates by 75 basis points, its largest single hike since 1989.
Against this backdrop, Brent crude fell from $96 to finish around $94,65 a barrel. Oil futures also struggled amid the rallying dollar. The USD index rallied nearly 1.5% to settle around 113.00 as traders cheered the Fed’s hawkish hike.
However, oil futures resumed the ascent on Friday as the US dollar eased. Still, the bullish momentum looks limited even as Brent extended gains towards three-week highs just below the $97 mark earlier in the day before giving up some intraday gains. In a sign global economic slowdown, Saudi Arabia lowered most oil prices for Asia.
On the other hand, the oil market remains well supported by a prospect of a fall in Russian exports as the European Union tightens sanctions in a month. Furthermore, the US and its partners have agreed to set a price cap on Russian crude oil at a fixed level.
Brent crude futures rose 2.3%, to $96.82 in late Asian trading. The contract was on track to end the third bullish week in a row. Should the prices overcome the $97 handle, the $100 psychological level will come back into the market focus, with the intermediate barrier lying around $98.75. On the downside, the immediate support now arrives around $95.30, followed by the $94.20 zone.