NEW YORK Oil prices went up in the end, helped by signs from Saudi Arabia that OPEC might cut supply. However, trading was choppy as investors thought about and eventually ignored the president of the US Federal Reserve’s warnings of coming economic trouble.
Brent crude prices rose $1.65 per barrel to close at $100.99 per barrel.Futures for US West Texas Intermediate (WTI) crude increased 54 cents to $93.06 a barrel. Both contracts increased and decreased by $1 during the session.
Brent rose 4.4% for the week, while WTI was expected to gain 2.5%.
A person familiar with the situation told Reuters that the United Arab Emirates is the most recent OPEC+ member to indicate that it shares Saudi Arabia’s perspective on oil prices.
On Monday, Saudi Arabia hinted at the prospect of production restrictions to counter the return of Iranian barrels to oil markets should Tehran reach a nuclear agreement with the West.
“The perception persists that Saudi Arabia would not allow price declines below $90. “Commerzbank stated in a report that this might be seen by speculators as an invitation to wager on more price increases without the need to fear more significant price decreases.”
Oil prices dropped briefly after Federal Reserve Chair Jerome Powell said that monetary policy might be tightened “for some time” to fight inflation. This would slow economic growth, make the job market worse, and cause “some pain” for families and businesses.
The Fed’s personal consumption expenditure price index fell to 6.3% on an annualised basis in July, down from 6.8% in June. In July, inflation expectations as measured by the University of Michigan decreased.
Then, Powell stated that “a single month’s improvement falls well short” of what the Fed wants to see.
“The market is concerned that Powell sounded somewhat more hawkish on inflation,” said Phil Flynn, an analyst with Chicago’s Price Futures organisation.
Five people with direct knowledge of the situation told Reuters that some European Central Bank officials want to think about raising interest rates by 75 basis points at a policy meeting on September 8. This is despite the fact that there are risks of a recession and the inflation outlook is getting worse.
The number of oil drilling rigs in the United States increased by four to 605 in the week ending August 26, according to Baker Hughes Co.
The US Commodity Futures Trading Commission (CFTC) said on Friday that money managers increased their net long crude futures and options holdings by 24,215 contracts for the week ending August 23.