Oil prices fell around 9% during the week ending Oct. 6, recording its steepest weekly decline of the last seven months triggered by a strong dollar, build in US gasoline stockpiles, Russia’s decision to ease diesel export ban and the resumption of Iraq-Türkiye crude oil pipeline.
International benchmark Brent crude traded at $84.08 per barrel at 14.29 p.m. (1129 GMT) on Friday, decreasing by around 8.8% relative to the closing price of $92,20 a barrel on Friday last week.
West Texas Intermediate (WTI), the American benchmark, was trading at $82.40 a barrel at the same time on Friday, down 9.2% from last Friday's session, which closed at $90.79 per barrel.
Oil prices started the week on a volatile trading session over lingering uncertainties ahead of a much-expected OPEC decision on their production policy in November and beyond.
Following the Joint Ministerial Monitoring Committee (JMMC) meeting on Wednesday, the group declared it would sustain output cuts, fueling fears that supply would continue to decline despite a predicted increase in demand in the fourth quarter.
Just hours before the meeting, Russia and Saudi Arabia said they would continue their existing supply cuts until the end of the year. They also confirmed their decision would be reevaluated in November with the possibility of deepening output curbs or increasing production.
Russian Deputy Prime Minister Aleksander Novak said that a market analysis would be conducted next month to determine whether oil production would be reduced or increased.
In line with the confirmed output scheme, Russia will reduce its crude exports by 300,000 barrels per day (bpd) while Saudi Arabia will curb by 1 million bpd in addition to its output cut of 500,000 bpd ongoing since May.
Following the rising value of the US dollar as a result of the US government’s decision to avert a shutdown over the weekend, oil prices further declined as dollar-indexed crude oil becomes more expensive for the holders of other currencies.
Easing supply concerns and supporting price downturns, Turkish Energy Minister Alparslan Bayraktar said on Monday that 500,000 barrels of oil per day would be supplied to global markets following the country’s decision to restart oil flow on a pipeline that transports Iraqi crude from Kirkuk to export facilities in Ceyhan on the Turkish Mediterranean coast.
Fears of a shortage were further allayed as Russia declared on Friday that it had largely lifted the embargo on diesel shipments by pipeline via seaports, which had been in force since September 21.
The restrictions for gasoline exports, meanwhile, remain in force.
- Demand concerns grow as US gasoline stocks build
Following data indicating that oil consumption started to fall in the world’s largest oil consumer, the US, with the end of the summer, prices retreated by around 5% on Thursday after rising to 12-month highs last week.
The US Energy Information Administration (EIA) data on Wednesday showed that US gasoline stocks rose approximately 6.5 million barrels, reaching 227 million barrels.
Fears of another Fed interest rate hike intensified, also bringing prices down, after US Labor Department figures showed that US job openings rose more than expected to 9.61 million in August, relative to the forecast of 8.8 million.
Markets are now awaiting ADP non-farm payrolls data, to be issued later on Friday, in order to gain insight into the Fed's next interest rate decision.
- China’s improving demand outlook positively reflects on prices
Increasing factory activity of China, the world's top oil importer, meanwhile, boosted the prices.
According to official data released on Sunday, China's factory activity increased in September for the first time in six months, adding to a growing number of indicators that the world's second-largest economy is becoming more stable.
By Duygu Alhan and Sibel Morrow
Anadolu Agency
energy@aa.com.tr