Oil prices held steady on Thursday after hitting a seven-week high in the previous session as Russia decided to limit fuel exports until the end of the year. However, the gains were capped by the latest US economic data that dampened optimism about further interest rate cuts.
Brent crude futures closed 11 cents, or 0.16%, higher at $69.42 a barrel, while US West Texas Intermediate crude futures fell 1 cent, or 0.02%, to $64.98. Both benchmarks rose 2.5% on Wednesday, reaching their highest levels since August 1, driven by a surprise drop in weekly US crude inventories and concerns that Ukraine's attacks on Russian energy infrastructure could disrupt supplies.
Crude prices received further support after Russian Deputy Prime Minister Alexander Novak said on Thursday that his country would impose a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, following a series of Ukrainian drone attacks on Russian oil refineries.
Covering some gains, U.S. gross domestic product expanded at an upwardly revised 3.8% annual rate in the last quarter, according to the Commerce Department's Bureau of Economic Analysis in its latest estimate on Thursday.
"The initial reaction to that was a sell-off," said Phil Flynn, senior analyst at Price Futures Group. Stronger-than-expected economic data will make the Federal Reserve more cautious about cutting interest rates. The U.S. central bank cut interest rates by 25 basis points last week, the first cut since December, and has signaled further cuts ahead.
Price pressure also comes from bearish expectations about supply fundamentals, with more oil expected to come from Iraq and Kurdistan. The Kurdistan Regional Government announced on Thursday that oil exports would resume within 48 hours after a tripartite agreement was reached between the Iraqi Ministry of Oil, the KRG Ministry of Natural Resources, and producing companies.
"The return of supplies from the Kurds adds to concerns about the oversupply narrative, which has driven prices down to near seven-week highs," said Priyanka Sachdeva, senior market analyst at Phillip Nova. (alg)
Source: Reuters
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