Oil Prices Rise on The Possibility of A Deeper Russian Supply Reduction

Oil prices rose on Thursday as reports suggested that Russia's supply cuts will be larger than previously announced, but markets suffered severe weekly losses due to concerns of rising interest rates.

According to Reuters, Moscow plans to reduce crude exports from its western ports by up to 25 percent in March compared to the previous month in an effort to increase oil prices. The action is anticipated to result in a greater reduction in supply than the 500,000 barrels announced earlier this month.

The supply reductions are a response to price ceilings imposed by the West on Russian crude exports, which Moscow has condemned.

By 21:29 ET, Brent oil futures increased 0.5% to $80.89 per barrel, while West Texas Intermediate crude futures increased 0.5% to $74.28 per barrel (02:29 GMT). This week, both contracts were down roughly 3%.

This week, crude oil prices declined as the dollar strengthened in response to a growing number of wagers that the Federal Reserve will recommence increasing interest rates at a rapid pace next month. The markets are concerned that rising interest rates will restrain economic growth later this year, thereby diminishing oil demand.

The minutes from the Federal Reserve's February meeting revealed that the majority of officials supported additional interest rate hikes. After the meeting, higher-than-anticipated inflation readings could prompt more officials to call for larger rate increases.

Wednesday's industry data indicated that U.S. crude inventories increased by 10 million barrels in the week ending February 17. The reading typically foreshadows a similar trend in data from the U.S. Energy Information Administration, which is anticipated to indicate that U.S. inventories increased for a ninth consecutive week. The data is due Thursday evening.

Increasing U.S. inventories and the planned sale of 26 million barrels from the U.S. Strategic Petroleum Reserve indicate a potential supply surplus in the world's largest oil consumer, which is anticipated to limit any crude price appreciation.

In recent weeks, crude markets have been weighed down by this and concerns of additional Fed-induced demand headwinds.

Later in the day, a second estimate of fourth-quarter U.S. GDP will be released. However, crude markets have reacted negatively to data indicating resilience in the U.S. economy, as it gives the Fed more leeway to continue raising interest rates.