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Oil Prices Surge, Yet Record Largest Weekly Drop Since March

US oil rig count hits lowest since Feb 2022 at 497, while money managers cut long positions in crude futures by 5,877 contracts.

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New York, Oct 7 (The Street Press) – On Friday, oil prices went up, but for the whole week, they had their biggest drop since March. This happened because Russia allowed some fuel exports again, which added to concerns about lower demand because of economic challenges.

On Friday, the price of Brent futures ended at $84.58 per barrel, rising by 51 cents. Meanwhile, U.S. West Texas Intermediate crude futures settled at $82.79, going up by 48 cents.

Over the course of the week, Brent experienced a drop of approximately 11%, while WTI saw a decrease of more than 8%. This decline was driven by concerns that ongoing high interest rates would hinder worldwide economic growth and significantly impact fuel demand, regardless of the supply cuts announced by Saudi Arabia and Russia, who have committed to continuing these cuts until the end of the year.

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In September, U.S. job growth surged by 336,000, a figure that greatly surpassed economists’ expectations of a 170,000 increase, as reported by the Labor Department.

The impact of these statistics on oil prices is somewhat mixed. A thriving U.S. economy could boost confidence in short-term oil demand, according to analysts. However, it also led to a stronger U.S. dollar and increased speculations about another interest rate hike in 2023, which could potentially exert downward pressure on oil prices.

Indeed, a strong U.S. dollar tends to have a negative impact on oil demand, as it makes oil relatively more expensive for those using other currencies.

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As for the job numbers, ING analysts noted that they support the Federal Reserve’s case for maintaining higher interest rates for an extended period, potentially leading to another rate hike.

Additionally, Russia has lifted its ban on diesel exports for supplies delivered to ports by pipeline, although companies are still required to sell at least 50% of their diesel production within the domestic market.

The price difference between gasoil and Brent futures dropped to its lowest point since July, reaching $23.59 a barrel on this news. However, it has since bounced back to $25.84.

According to SEB analyst Bjarne Schieldrop, concerns about the global economy’s health and its impact on future oil demand have been driving this sell-off.

Nevertheless, there have been reports of increased travel activity in China, which has helped support prices for now. During the mid-autumn and National Day holidays, Chinese travel rose by 71.3% compared to the previous year and by 4.1% compared to 2019, totaling 826 million trips, as reported by Xinhua news agency.

The number of U.S. oil rigs declined by five this week, reaching a total of 497, which is the lowest count since February 2022, as reported by energy services firm Baker Hughes.

Additionally, money managers reduced their net long positions in U.S. crude futures and options by 5,877 contracts to a total of 279,759, according to the U.S. Commodity Futures Trading Commission (CFTC) data released on Friday.

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Sk Sahiluddin
Sk Sahiluddin
Sk Sahiluddin is a seasoned journalist and media professional with a passion for delivering accurate and impactful news coverage to a global audience. As the Editor of The Street Press, he plays a pivotal role in shaping the editorial direction and ensuring the highest journalistic standards are upheld.
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