Oil Ends Week On A High Note As Tight Supplies Again Worry Traders

Meanwhile, Russia shrugs off the effects of the Western price caps: File Image/Pixabay

Capping a week of trading volatility driven by sentiment rather than logic, fickle oil traders once more reversed gears on Friday and caused the commodity to rise by almost 1 percent as they revisited concerns that inventories around the world are tightening.

Brent settled up 73 cents, or 0.8 percent, at $90.65 per barrel, while West Texas Intermediate settled up 64 cents, or 0.7 percent, at $87.51.

Triggers included earlier news that Saudi Arabia and Russia would extend voluntary production cuts if necessary, as well as U.S. heating oil prices rising about 3 percent, and Washington confirming that in April it seized it seized a shipment of more than 980,000 barrels of contraband crude oil from Iran bound for China.

Other reasons for Friday's bullish oil trading were said to be a strike at Chevron's LNG projects in Australia (which produce about 5 percent of the world's LNG supply), and Germany passing a bill that would phase out oil and gas heating systems.

Still, the market remains mired in uncertainly and conflicting opinion: JPMorgan Chase & Co. analysts including Natahsa Kaneva said crude is unlikely to rise to $100 per barrel this year because the demand outlook is challenging.

John Evans, an analyst at PVM Oil Associates Ltd., added, "Oil's rally deserves all the plaudits of the impressive type but faces some intriguing times; how the next two week's central banks' decisions will affect progress is about to keep oil on tenterhooks for some time."

Evens made this remark as oil traders continued to watch whether central banks in the U.S. and Europe will keep fighting inflation with interest rate hikes.

In other oil related news on Friday, a government created forecast that was submitted to Russia prime minister Mikhail Mishustin posited that despite the price caps and embargos, the former Soviet Union still expects its oil export revenues to continue to increase over the next three years.

The forecast estimates an average price for crude oil at $62.70 per barrel, nearly $3 above the price cap established by the G7 at the end of 2022; the price will rise to $66.30 in 2024, to $67.90 in 2025, and to nearly $70 per barrel by 2026.