Oil holds steady at multi-week high as Russia limits fuel exports, US GDP revised up

Oil prices steadied on Thursday after hitting a seven-week high in the previous session as Russia moved to restrict fuel exports until the end of the year, but the gains were limited by new US economic data that tempered optimism around further interest rate cuts.

Brent futures settled 11 cents, or 0.16 per cent, higher at US$69.42 a barrel while US West Texas Intermediate futures lost 1 cent, or 0.02 per cent, to US$64.98.

Both benchmarks gained 2.5 per cent on Wednesday to reach their highest since Aug 1, driven by a surprise drop in US weekly crude inventories and concerns that Ukraine’s attacks on Russia’s energy infrastructure could disrupt supplies.

Oil received more support after Russian Deputy Prime Minister Alexander Novak said on Thursday the country would introduce a partial ban on diesel exports until the end of the year and extend an existing ban on petrol exports, following a spate of Ukrainian drone attacks on Russian refineries.

Capping some gains, US gross domestic product increased at an upwardly revised 3.8 per cent annualised rate last quarter, the Commerce Department’s Bureau of Economic Analysis said in its latest estimate on Thursday.

“The initial reaction on that was a sell-off,” said Phil Flynn, a senior analyst at Price Futures Group.

SEE ALSO

Stronger than expected economic data would make the Federal Reserve more cautious about cutting interest rates. The US central bank cut rates by 25 bps last week, its first cut since December, and had signaled more reductions ahead.

Price pressure also came from bearish expectations on supply fundamentals, with more oil expected from Iraq and Kurdistan. The Kurdistan Regional Government announced on Thursday that oil exports would resume within 48 hours after the tripartite agreement among Iraq’s oil ministry, the KRG ministry of natural resources and producing companies.

“The return of Kurdish supplies adds back fears of an oversupply narrative, propelling a pullback in prices that hover near a seven-week high,” said Priyanka Sachdeva, senior market analyst at Phillip Nova. REUTERS