September 29, 2023 [Reuters]- Oil prices edged higher on Friday, and were headed for a gain of 2% for the week, driven by tight U.S. supply and expectations of strong fuel demand in China during the Golden Week holiday.
Front-month Brent November futures were up 42 cents, or 0.44%, to $95.80 per barrel at 0943 GMT, ahead of the contract’s expiry later in the day. The more-liquid Brent December contract was up 33 cents, or 0.35%, at $93.43 per barrel.
U.S. West Texas Intermediate crude (WTI) gained 51 cents, or 0.56%, to $92.22 per barrel.
Brent futures touched their highest since November 2022 on Thursday, hitting an intra-day peak of $97.69 a barrel. Meanwhile, WTI hit its highest intra-day price since August last year at $95.03 a barrel.
A backdrop of tight supplies in the U.S. provided further price support, with storage at Cushing, Oklahoma, the delivery point for U.S. crude futures, already at its lowest since July 2022.
“Any additional decline would threaten to bring them down to a critical level, which could make further withdrawals difficult,” said Commerzbank analyst Carsten Fritsch.
China’s fuel demand was set to firm as the week-long Golden Week holiday began on Friday.
“(An) increase in international travel during the Golden Week holiday is boosting Chinese oil demand,” ANZ analysts said in a client note.
Domestic travel is also expected to boost demand, with data from flight app Umetrip showing the average number of daily flights booked is a fifth higher than for Golden Week in 2019, before COVID.
Meanwhile, inflation in the euro zone fell to a two-year low of 4.3% in September, the latest Eurostat flash reading showed, suggesting the European Central Bank’s policy of steady interest rate hikes was taking effect.
Russia is considering introducing fuel export quotas if the current export ban is not effective in bringing down domestic prices.
“Price increases are unacceptable. If the situation does not change, strict regulatory measures will be taken,” Deputy Prime Minister Alexander Novak said.
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