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Oil rises as global supply contracts, demand surges

29.09.23 13:32

Oil prices rose on Friday with the growing gap between supply and demand triggered by ongoing supply cuts and a surge in demand in the world's biggest oil consumers, the US and China.

International benchmark crude Brent traded at $93.25 per barrel at 10.08 a.m. local time (0708 GMT), a 0.16% gain from the closing price of $93.10 a barrel in the previous trading session on Thursday.

The American benchmark West Texas Intermediate (WTI) traded at the same time at $91.89 per barrel, up 0.20% from Thursday's close of $91.71 per barrel.

Oil prices climbed to their highest level of the year on ongoing global supply fears. The world's biggest producers, Saudi Arabia and Russia, agreed to cut output by around 1.3 million barrels per day (bpd) until the end of the year.

Exacerbating supply concerns further, the Russian government announced plans last week to limit the export of gasoline and diesel fuel. Russia's ban will remain in place until fuel supplies and prices stabilize on the domestic market, Russia's TASS news agency quoted Russian Energy Minister Nikolay Shulginov as saying on Thursday.

Prices gain support from an anticipated increase in demand in the US and China.

The Energy Information Administration reported on Wednesday that US oil inventories decreased by about 2.2 million barrels to 416.3 million barrels, compared to the American Petroleum Institute's expectation of an increase of about 1.6 million barrels, which led to price increases.

Furthermore, positive economic data in China, the world's largest oil importer, is raising expectations of increased demand in the country, supporting upward price movements.

China’s week-long autumn festival holiday that begins today is anticipated to drive fuel demand with a rise in the number of travelers over the holiday, AA reports.