ISLAMABAD
Oil futures snapped their two-week losing streak as traders once again turned their attention from economic indicators to OPEC+ supply policy and a positive US jobs report.
Both major global benchmarks Brent and West Texas Intermediate (WTI) ended the week higher by 4.82 percent and 7.17 percent, respectively. Brent’s 4.82 percent weekly gain has been the highest since late July, while WTI’s 7.2 percent weekly gain has been the highest since March. Year-to-date, Brent is up 3.1 percent and WTI is 6.6 percent up.
Brent, the international benchmark for two-thirds of the world’s oil, jumped to $88.55 from $84.48 a barrel, showing an increase of $4.07 on a week-on-week (WoW) basis. During the intraday trade on Friday, it hit the $88.75 mark which has been its highest level since January.
West Texas Intermediate (WTI), the main oil benchmark for North America, edged up to $85.55 from $79.83 a barrel on a weekly basis, registering a weekly gain of $5.72.
During the intraday trade on Friday, it hit the $85.81 mark which has been its highest level since November.
On the other hand, Arab Light prices witnessed an increase of $2.92 (+3.32 percent) to reach $90.97 from $88.05 a barrel on a weekly basis. Similarly, the price for Opec Basket increased to $88.44 from $85.71 on a week-on-week basis, showing a gain of $2.73 (+3.19 percent). Similarly, the price of Russian Sokol increased by $2.62 (+3.33 percent) to $81.31 from $78.69 on WoW basis.
Traders have, once again, turned their attention from economic indicators to OPEC+ supply policy. The US crude stocks fell by a bigger than expected 11.5 million barrels in the week ended August 25, according to American Petroleum Institute (API) figures released on Tuesday. To date, crude inventories in the US are at the lowest since last December.
This perception undermined fears among traders that sluggish economic growth in the biggest oil markets in the world would affect global demand negatively, helped by positive economic data from the US. Even China’s latest PMI reading did not pressure prices, possibly because while the overall figure was in the contraction zone below 50, several important sub-readings were above 50, indicating growth.
The OPEC+ is meeting next week to discuss its next moves and analysts expect the production cuts to remain unchanged and get extended for another month as the group seeks sustained higher prices. Russia has already said it would extend its export cuts for another month, which also contributed to this week’s price gains and now traders anticipate an identical move by Saudi Arabia with regard to its production.
Meanwhile, US employers added more job gains than expected last month, but underlying numbers point to expectations that the Federal Reserve could be done with raising interest rates. Employers added 187,000 jobs in August. While the headline employment figure showed a resilient labour market, Friday’s report showed signs of softening at a steady pace. It is positive news for the Fed, which has raised interest rates 11 times since March 2022 to curb inflation.
On the local front, the caretaker government late Thursday jacked up the petrol and diesel prices by Rs14.91 and Rs18.44 per litre, respectively, to Rs305.36 and Rs311.84. The local currency is at an all-time low following an easing in import restrictions that has increased the greenback’s demand and rising risks associated with financing the country’s current account deficit. In the preceding two fortnights, the petrol price had already been increased by Rs37.50 and diesel by Rs40 per litre.
