Brent flat as supply concerns counter US inflation data

The front-month ICE Brent contract has inched down $0.05/bbl on the day, to trade at $92.55/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Saudi Arabia and Russia’s decision to extend supply cuts through the end of 2023 have helped Brent futures to gain this week.

“As long as OPEC+ is committed to export and production curtailments, oil prices will remain firm during the current levels of record demand,” said SPI Asset Management’s managing partner Stephen Innes.

Recent surge in oil prices also suggests that "the latest efforts of Saudi Arabia and Russia are working in tightening the markets and boosting prices after multiple failed efforts,” said OANDA’s market analyst Craig Erlam.

Additionally, the International Energy Agency (IEA) has forecast global oil demand to grow by 2.20 million b/d to 101.8 million b/d in 2023 due to strong consumption in China, and higher jet fuel demand.

Downward pressure:

Downward pressures acting on Brent futures today include news that Libya has resumed oil supply from its four major ports, which were closed since Saturday after being hit by floods due to Hurricane Danielle.

The four ports situated in Eastern Libya resumed operations on Wednesday, Reuters reported, citing port agent Al Omran International Maritime Agencies.

Moreover, US core inflation rose 8 basis-points above the market consensus in August, Innes said. A higher-than-expected inflation reading has triggered concerns about yet another interest rate hike by the US Federal Reserve (Fed).

“The CPI (Consumer Price Index) report adds some uncertainty about its [Fed's] November decision, especially with OPEC+ leaders possibly targeting Brent prices very much at the upper end of or slightly above, the $80-100/bbl range,” Innes said.

By Aparupa Mazumder

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