Brent remains supported in a tight market

The front-month ICE Brent contract has moved up $0.18/bbl on the day from Friday, to trade at $93.86/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

The market has looked past last week's US interest rate freeze and reshifted its focus back to tight supply. Russia’s temporary ban on road fuel exports has continued to help Brent futures move upward.

“The oil market has held relatively steady in recent days with tightness in the physical market coupled with Russia’s recent export ban on diesel and gasoline,” said analysts at ING.

“Russia yielded its energy weapon by banning exports of diesel and gasoline in a market that is short of both,” said the Price Futures Group’s senior market analyst Phil Flynn.

Downward pressure:

The surge in oil prices has contributed to an “uptick in headline inflation,” said SPI Asset Management’s managing partner Stephen Innes. This is “raising concerns about the impact on consumers and the [US] Federal Reserve’s [Fed] next actions,” he added.

Even though the US Fed kept its interest rates unchanged in the latest the US Federal Open Market Committee (FOMC) meeting, market analysts expect this "hawkish" pause in the hiking cycle to keep the window open for future rate hikes.

Higher interest rates can put further downward pressure on Brent as it affects consumer spending and fuel demand.

By Aparupa Mazumder

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