Brent sheds previous day's gains

The front-month ICE Brent contract has lost $1.65/bbl on the day, to trade at $95.11/bbl at 08.57 GMT.

PHOTO: An oil barrel. Getty Images

Upward pressure:

Tight crude oil supply in the global market amid output reductions and export cuts by the top OPEC+ producers Saudi Arabia and Russia have pushed Brent futures higher this week.

Russia’s energy minister Nikolai Shulginov said on Thursday that the country will not lift its ban on fuel exports until the domestic fuel supply and prices stabilise, Reuters reported citing TASS.

Even though the Russian government made some amendments to its temporary export ban last week by lifting restrictions on bunker fuel sales, Shulginov reaffirmed that “expectations of a quick lifting of the fuel export ban are futile,” TASS reported.

Oil traders are now waiting for fresh cues from the OPEC+ producers’ joint ministerial meeting scheduled on 4 October. The member countries are expected to discuss further supply reduction plans in the meeting.

Downward pressure:

Meanwhile, Brent's recent upward rally has triggered concerns about more inflationary pressures, which could prompt the US Federal Reserve (Fed) and other central banks to hike interest rates later this year.

“Lingering in the back of traders’ minds are concerns that higher oil prices will help keep inflation elevated and lead to additional interest-rate hikes later this year,” said SPI Asset Management’s managing partner Stephen Innes.

Moreover, Brent futures shed yesterday's gains as the oil market is in “overbought territory”, commented analysts at ING.

“Brent struggled to hold onto gains made in the early part of the trading session. There is likely reluctance amongst participants to push too much higher right now with the market clearly in overbought territory," they added.

By Aparupa Mazumder

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