Commodities Week Ahead: Oil Bulls Seek Higher $90s Amid China, Fed Challenge
After the first weekly loss in four, oil bulls will be raring to push crude oil towards the higher $90s, while top buyer China again faces its recurring bogeyman — an ailing property sector — that’s weighing on its stock market.
Over in the United States, the spotlight will be on speeches by several Federal Reserve policy-makers — most notably Chairman Jerome Powell on Friday — to follow through with the central bank’s decision last week to hold interest rates where they are but add to them as necessary to keep inflation under control.
On the positive side of oil, Russia’s so-called temporary fuel export ban announced last week had put a floor beneath crude prices despite Friday’s start of fall, or autumn, where demand typically tapers after the peak summer driving season.
“Despite the Fed's intent on cooling consumer demand, just as the markets hit the end of US driving season, typically associated with a mini seasonal swoon in gasoline demand and help ease the current oil supply shortage, Russia decided to introduce a temporary ban on gasoline and diesel exports,” Stephen Innes, head of trading and market strategy at SPI Asset Management.
The Russian action will be “compounding scarcity just as the winter diesel rush looms large”, Innes added.
Diesel is the workhorse fuel of the global economy, playing a crucial role in freight, shipping, and aviation. Derivatives of diesel such as heating oil are particularly susceptible to winter price surges. Germany and the north-east of the U.S. are both heavily reliant on fuel for heating homes.
Russian refined fuel sales, particularly diesel, remain a critical part of global oil supplies. In August, Russia exported more than 30 million barrels of diesel and gas-oil — a diesel
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