Oil prices edged higher on Friday as concerns over tighter fuel supplies offset signs of improving crude exports from the Middle East, while reports of a US military build-up in the region added to market uncertainty.
Brent crude futures rose 29 cents or 0.28% to US$102.60 a barrel as of 0022 GMT, while West Texas Intermediate crude gained 27 cents or 0.29% to US$93.14.
The gains followed a volatile session on Thursday, when Brent jumped more than US$4 and WTI rose more than US$2 after reports that China had halted fuel exports and the US was sending more troops and an additional aircraft carrier to the Middle East.
Brent is on track for a 1.93% weekly decline after gaining 14% in September, while WTI rose about 4% last month.
“The market is taking stock of a distinctly mixed set of signals this week,” said KCM Trade chief analyst Tim Waterer, adding that traders were “simply taking a breather” after Thursday’s sharp moves.
“A healthier-looking Saudi export picture is being offset by reports of another US aircraft carrier heading toward the Gulf and by China’s decision to curb refined product exports,” he said.
The Wall Street Journal reported that the US was sending a third aircraft carrier and up to 10,000 additional troops to the Middle East as President Donald Trump considers whether to resume strikes on Iran after the US midterm elections.
“Now I have to make a decision. They’ll either sign a very fair deal, or they won’t exist any longer,” Trump told reporters at the White House.
China’s fuel export restrictions have also raised concerns over global diesel, gasoline and jet fuel supplies. Beijing tightened exports in March following the outbreak of the US-Israeli war on Iran before easing the curbs in July.
China began a week-long holiday on Thursday without giving major refiners approval to export fuel to markets outside Hong Kong and Macau for October. It remains unclear whether export permissions will resume after the holiday ends on Oct 7.
At the same time, crude exports from Saudi Arabia and other Gulf producers have been showing signs of recovery, providing some counterweight to the tighter refined-product supply outlook.
The US has also pressured Germany and France to release emergency diesel inventories to help ease global fuel prices, according to people familiar with the discussions.
A source told Reuters that Washington had asked European countries to release 120 million barrels of diesel over the next six months. EU countries hold nearly 109 million tonnes of emergency crude and fuel stocks.
“US pressure on EU nations to release oil is also adding to that check on prices,” said Mukesh Sahdev, chief oil analyst at XAnalysts.
The conflicting signals have left traders weighing stronger Middle Eastern crude flows against tighter refined-product supplies and the risk of further military escalation in the Gulf.
Reuters
