Oil prices settled higher on Friday to post a modest gain for the week, following Russia’s decision a day earlier to temporarily ban the export of diesel and gasoline, which has pushed up prices in Europe.
Price action
-
West Texas Intermediate crude futures for November delivery
CL00,
+0.78% CLX23,
+0.78%
edged up 40 cents, or 0.5%, to settle at $90.03 a barrel on the New York Mercantile Exchange, scoring a modest weekly advance of 0.01%, according to Dow Jones Market Data. -
November Brent crude futures
BRN00,
+0.51% BRNX23,
+0.60%
were off 3 cents, leaving it nearly flat at $93.27 a barrel on ICE Futures Europe. For the week, they booked a loss of 0.7%. -
October gasoline
RBV23,
-1.89%
declined by 5 cents, or 2.2%, to end at $2.5618 a gallon, logging a weekly decline of 5.4%, while October heating oil
HOV23,
-0.80%
fell 6 cents, or 1.8%, to finish at $3.3062 a gallon, suffering a weekly drop of 2.3%. -
November natural gas
NGX23,
+1.69%
rose 2 cents, or 1%, to settle at $2.6370 per million British thermal units, but settling down 0.3% for the week, according to Dow Jones Market Data.
Market drivers
U.S. energy prices settled modestly higher on Friday afternoon, a day after Russia announced a temporary ban on exports of gasoline and diesel outside a small circle of closely allied states to keep supplies available for processing the annual wheat harvest, in particular.
Russia is one of the world’s biggest seaborne exporters of diesel and the ban follows a fall in shipments earlier this month, which helped push up diesel prices in Europe.
“We suspect that the ban will remain in place at least for a month or so, until the harvest is complete,” said Edward Gardner, commodities economist at Capital Economics, in a Friday note. Then, Russia is expected to unwind it to take advantage of high crack spreads, which is the overall pricing difference between crude oil and the petroleum products refined from it.
However, Gardner said the ban will still support crude oil prices while it is in place, as higher crack spreads will incentivize non-Russian refineries to increase crude oil throughput.
See: Could rising oil prices tip the U.S. into a recession? Here’s why investors are nowhere near having to worry about it.
Russia’s announcement is the latest in a series of production cuts and supply restrictions that have helped prop up energy prices since mid-July.
Rising oil prices contributed to consumer prices rising in the U.S. in August, and as inflation expectations rise, they could complicate the Federal Reserve’s mission to tame inflation, potentially creating problems for global equity markets.
Many analysts expect crude prices in the U.S. and in international markets to move up to, or past, $100 a barrel, a level oil hasn’t seen since last year.
“Brent oil has already surpassed the $95 level and could climb towards $100 if the OPEC+ continues to withhold supply,” said Fawad Razaqzada, market analyst at City Index and FOREX.com, in emailed commentary.
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