Oil Mixed As Hawkish U.S. Fed Continues To Spook Traders

Meanwhile, Occidental shrugs off soaring oil prices: File Image/Pixabay

Oil trading on Monday was choppy amid the continued fallout over the U.S. Federal Reserve recently suggesting that interest rates would remain higher for longer, and influenced by news that Russia's fuel export ban is already being lifted under some circumstances.

Brent settled up 2 cents at $93.29 per barrel, while West Texas Intermediate settled down 35 cents at $89.68.

A government document showed that Moscow approved changes to its ban, allowing for the export of bunkers for some vessels as well as diesel with high sulphur content; however, the ban on gasoline and high quality diesel remains intact, implying that concerns of a tight market will continue as the winter season in the Northern Hemisphere approaches.

But the biggest influence on Monday's trading was said to be the Fed's hawkish stance, and Andrew Lipow, president of Lipow Oil Associates, said, "The market may be still wrestling with the Fed keeping interest rates higher for a longer period of time, which can impact the demand side of the equation."

Bloomberg on Monday theorized that traders are now looking to China "for signs of surging demand as the world's top oil importer gears up for the Golden Week holiday from Friday"; the news agency pointed out that over 21 million people are expected to fly during the eight-day holiday.

In other oil related news on Monday, Vicki Hollub, CEO of Occidental Petroleum Corp., told media her company would not be increasing oil output despite escalating prices.

She said, "Only in a market where we see balance would we increase our oil production – and even then it would be at a moderate pace," and she added that even if crude hits $100 per barrel it would likely not be long-lasting enough to cause demand destruction.

Also on Monday, unnamed sources told Reuters that Chevron is preparing to launch a new drilling campaign in Venezuela that could add 65,000 barrels per day within a year; Chevron's joint venture with state-owned PDVSA now produces around 135,000 bpd, representing a 70 percent increase over last year's output.