Oil prices gain ground, but headed for weekly decline

Crude oil prices had surged to a 10-month high on September 15, embarking on their third consecutive week of gains along with a fresh high for 2023

Crude oil prices rose on September 22 as concerns that a Russian ban on fuel exports could tighten global supply outweighed fears that further US interest rate hikes could dent demand. However, the prices are headed for the first weekly decline in four weeks.

Crude prices remained 1 percent lower this week than the previous ones, where in the past three weeks, it had gained over 10 percent amid concerns about tight global supply as the Organization of the Petroleum Exporting Countries and allies (OPEC+) maintains production cuts.

Reuters reported that Brent futures climbed 46 cents, or 0.5%, to $93.76 a barrel by 0630 GMT, while US West Texas Intermediate crude (WTI) futures gained 65 cents, or 0.7%, to $90.28 a barrel.

Last week, crude oil prices had surged to a 10-month high on September 15, embarking on their third consecutive week of gains along with a fresh high for 2023. Prices increased as much as 3 percent in this week alone and the upward trend has translated into a 15 percent boost in oil prices in the month of August and a significant 13 percent year-to-date rise.

Support factors for oil prices:

Russia bans fuel exports

Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilise the domestic fuel market. The shortfall, which will force Russia's fuel buyers to shop elsewhere, caused heating oil futures to rise by nearly 5% on September 21.

Central banks US Fed, BoE, ECB keep interest rates unchanged

The US Federal Reserve on Wednesday maintained interest rates, but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50 percent-5.75 percent by year-end. That buoyed fears that higher rates could dampen economic growth and fuel demand while boosting the US dollar to its highest since early March, making oil and other commodities more expensive for buyers using other currencies.

The Bank of England mirrored the Fed and held interest rates on Thursday after a long run of hikes, but said it was not taking a recent fall in inflation for granted.

A European Central Bank (ECB) governing council member said the central bank will most likely keep interest rates stable at its next policy meeting.

US crude inventories may show decline of 2.3 million bls

Crude inventories fell by 2.1 million barrels in week ending September 15 to 418.5 million barrels, compared with analysts' expectations.

US crude stocks declined last week

US crude stocks fell last week, driven by strong crude oil exports, while gasoline and diesel inventories drew down as refiners began annual autumn maintenance, the Energy Information Administration said on September 20.

EIA noted that US oil output likely to decline for third month in October to 9.393 million barrels per day (mbd).

Q4 deficit estimates support outlook for crude

Analysts expect oil prices to stall this year as weak economic growth is expected to curb demand and offset the impact of OPEC+ production cuts on supply.

The global benchmark has averaged around $80 so far this year.