Summary:
Oil prices rose due to a supply squeeze after Russia's fuel export ban. The Fed's indication of a year-end hike ended a three-week winning streak.
Oil prices rose on Monday as investors focused on a tighter supply outlook after Russia issued a temporary ban on fuel exports. Both contracts snapped a three-week winning streak last week after Fed signalled one more hike by year-end.
Russia’s measure to stabilise the domestic market comes as major economies are heading into winter. Saudi and Russia surprised markets earlier this month with a cut extension of three-months.
In the US, the number of operating oil rigs fell by eight to 507 last week, their lowest since February 2022, a weekly report from Baker Hughes showed.
China's manufacturing sector is expected to return to expansion mode in September, according to Goldman Sachs. Besides the country is gearing up for the Golden Week holiday which could boost jet fuel demand.
Hedge funds boosted their bullish positions on WTI to the highest since February 2022, while the surge in prices has rekindled talk of the possibility of $100-a-barrel crude.
But analysts said that oil prices above $90 are not sustainable and they are facing technical resistance at November highs that were hit last week.
WTI did not manage to stay above 90 despite the latest tailwind from Russia, so a pullback towards support level is now likely.
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