Middle East – Tips For Traders

By Shariq Khan

BENGALURU (Reuters) – Oil prices fell by $2 per barrel to their lowest in two weeks on Wednesday, as investors became more concerned that recent data will prompt more aggressive interest rate increases by central banks, pressuring economic growth and fuel demand.

Brent crude futures settled $2.45, or 3%, lower at $80.60 per barrel. West Texas Intermediate crude futures (WTI) dropped $2.41, or 3%, to end at $74.05 a barrel.

The settlement levels were the lowest for both benchmarks since Feb. 3.

Minutes from the latest U.S. Federal Reserve meeting showed a majority of Fed officials agreed the risks of high inflation remained a “key factor” shaping monetary policy and warranted continued rate hikes until it was controlled.

“While better U.S. economic data should mean better oil demand, the concern is that this forces the Fed to overtighten monetary policy to bring inflation under control,” said UBS analyst Giovanni Staunovo.

“This is also supporting the U.S. dollar, which is not of help for oil.”

The U.S. dollar Index gained for a second straight session, making greenback-denominated oil more expensive for holders of other currencies. [USD/]

Other U.S. economic reports, however, showed some troubling signs for the world’s biggest oil consumer. Sales of existing homes fell in January to their lowest since October 2010.

U.S. crude stockpiles rose by 9.9 million barrels last week, according to market sources citing American Petroleum Institute figures on Wednesday. U.S. oil inventories have climbed every week since mid-December, worrying investors about demand in the country. [API/S]

A Reuters poll had forecast a 2.1 million barrels increase in crude stockpiles last week. Official data from the Energy Information Administration is due Thursday at 11:00 a.m. EST. [EIA/S]

The American Petroleum Institute, an industry group, releases its inventory report at 4:30 p.m. ET (2130 GMT).

Demand for crude oil is seasonally lower with major U.S. refineries deep in maintenance season, said Price Group analyst Phil Flynn.

Some 1.44 million barrels per day of U.S. refining capacity is expected to be offline in the week ending March 3, according to research company IIR energy.

A massive snowstorm in the U.S. Northern Plains and Upper Midwest has also hit fuel demand, with 3,500 flights delayed or cancelled across the country so far, according to FlightAware.com.

U.S. gasoline futures slid almost 4% to their lowest in two weeks.

(Reporting by Shariq Khan, additional reporting by Rowena Edwards and Trixie Yap; Editing by Marguerita Choy, David Gregorio and Lincoln Feast.)

By Laura Sanicola

(Reuters) -Oil settled down $2 a barrel on Friday and ended the week markedly lower, as traders worried that future U.S. interest rate hikes could weigh on demand and got nervous about mounting signs of ample crude and fuel supply.

On Thursday, two Fed officials warned additional hikes in borrowing costs are essential to curb inflation. The sentiments lifted the U.S. dollar, making oil more expensive for holders of other currencies.

Brent crude futures settled down $2.14 or 2.5%, to $83.00 a barrel, falling 3.9% week on week. West Texas Intermediate (WTI) U.S. crude settled down $2.15, or 2.7%, to $76.34, falling 4.2% from last Friday’s settlement.

“Rate hike jitters have returned with a vengeance,” said Stephen Brennock of oil broker PVM.

Various signs of ample supply also weighed on the market.

Russian oil producers expect to maintain current volumes of crude oil exports, despite the government’s plan to cut oil output in March, the Vedomosti newspaper said on Friday, citing sources familiar with companies’ plans.

The latest snapshot of U.S. supplies, released on Wednesday, showed crude inventories in the week to Feb. 10 rose by 16.3 million barrels to 471.4 million barrels, their highest level since June 2021.

“Because oil storage is at a 19 month high, refiners are going to stretch out turnaround season for as long as they can,” said Bob Yawger, director of energy futures at Mizuho.

Heating oil cracks fell 5% on Friday as warm weather sapped demand for the fuel in mid-February.

The oil and gas rig count, an early indicator of future output, fell by one to 760 in the week to Feb. 17, energy services firm Baker Hughes Co said on Friday.

Despite this week’s rig decline, Baker Hughes said the total count was still up 115, or 18%, over this time last year.

Some support came from moves this week by the International Energy Agency and the Organization of the Petroleum Exporting Countries to raise their forecasts for global oil demand growth this year, citing expectations for more Chinese demand.

And Saudi Arabia’s energy minister said the current deal by OPEC+, which groups OPEC producers with Russia and others, to cut oil output targets by 2 million barrels per day, would be locked in until the end of the year, adding he remained cautious on Chinese demand.

(Additional reporting by Alex Lawder, Yuka Obayashi and Sudarshan Varadhan; editing by Jason Neely, Kirsten Donovan and David Gregorio)