Saudi energy minister Abdulaziz bin Salman Al Saud said this week about the recent Saudi and Russian decision to cut production "It's not about prices, but rather about taking the right decisions based on data".

When Saudi Arabia took the decision to extend the voluntary production cuts, everyone thought it was about the price and the support for the ambitious Saudi budget. 

However, Saudi Arabia doesn't share that view itself, and actually shares many concerns with oil traders about growth struggles in Europe and other economies, which could impact prices and demand. 

Thus Saudi Arabia is worried about weakening global demand as the global economy slows down, which promoted it to intervene and cut production to underpin prices. 

The Saudi oil minister also said he doesn't share the International Energy Agency's view that global oil demand will peak before 2030.. adding he won't believe it until he sees it. 

Indeed, demand and supply forecasts are not very accurate, and an example is the exaggerated growth forecasts for Chinese growth this year which were supposed to boost prices. 

However prices were stubbornly weak despite the record Chinese demand, prompting Saudi Arabia and Russia to directly intervene and boost prices. 

It also doesn't look like there's a particular rush to oil alternatives, as demand remains strong even as EV car sales continue to surge in both Europe and the US. 

All this proves that oil demand is extremely flexible, and no surprise there, thus the Saudi oil minister isn't at all concerned. 

However, he outright criticized the International Energy Agency as a political mouthpiece that started to lose credibility. 

He pointed to unrealistic expectations for the usage of renewable solar and wind energy to generate power, including fuel for cars, instead of oil and gas, while asking investors to put their money according to such shaky basis.

To the complete opposite of this, Aramco CEO has recently criticized the IEA and called for increased investments in oil and gas to avoid another crisis in the medium term, which could force countries to use coal and other cheaper products.

Palladium prices fell on Friday as the dollar gained ground against most major rivals and amid growing concerns about inflationary pressures worldwide.

Such decline came as global oil prices rose worldwide, triggering inflation concerns in the US and Europe.

Earlier this week, the Federal Reserve voted to hold interest rates flat at 5.5%, while hinting strongly at another interest rate hike later this year.

Similarly, Bank of England decided to hold interest rates steady after recent data showed inflation has slowed down. 

The BOE held interest rates at 5.25% after a series of 14 consecutive interest rate hikes. 

However as inflation threatens to make a comeback, central banks could very well resume their policy tightening, in turn hurting high-risk assets.

Palladium is used extensively in the automotive industry, which is facing heavy strikes in the US, hurting demand. 

Otherwise, the dollar index rose 0.1% as of 16:59 GMT to 105.4, with a session-high at 105.7, and a low at 105.3. 

On trading, palladium futures due in December fell 1.2% to $1254 an ounce as of 17:00 GMT. 

Oil prices rose in European trade on Friday for the second session on track for ten-month highs scaled earlier this week.

The gains come amid hopes for the rebound of the global economy as global central banks pause their aggressive policy tightening. 

Prices are also boosted by a steep drop in US crude stocks according to official EIA data in a positive sign for demand.

Global Oil Prices

US crude rose 1.3% to $90.76 a barrel, while Brent added 0.7% to $93.92 a barrel, with a session-low at $92.29.

US crude rose 0.4% on Thursday, while Brent added 0.2%, the first profit in three days following two days of correctional losses. 

Global oil prices rose 6% on average since September 5 after both Russia and Saudi Arabia extended their voluntary production cuts for three more months. 

Global Economy

Global central banks including banks in Switzerland, Britain, the US, have all decided to pause interest rate hikes to gauge economic response.

Such a step will likely be followed by steps to support the economy early in 2024, which could include interest rate cuts.

A rebound in global economic conditions will obviously boost fuel demand.

US Stocks

The Energy Information Administration reported a drop of 2.1 million barrels in US crude stocks last week, while analysts expected a drop of 1.3 million barrels.

Gasoline stocks fell 800 thousand barrels to 219.5 million barrels, as distillate stocks fell 2.9 million barrels to 119.7 million barrels.

US Production

The EIA reported no change in US production at 12.9 million barrels, the highest since March 2020.

US 10-year treasury yields surge on Friday for the fourth straight session, moving above 4.5% for the first time in 16 years after the bullish stance by the Fed.

The Federal Reserve buoyed the chances of another interest rate hike before the year end while raising growth, inflation forecasts.

US Yields

US 10-year treasury yields rose 0.3% to 4.509% , the highest since October 2007, after rising 1.9% yesterday, the third profit in a row, following strong US labor data.

A recent tumble in US unemployment claims last week to six-month lows also boosted the chance of another Fed interest rate hike this year. 

The Fed

As expected the Federal Reserve maintained interest rates unchanged at below 5.5%, already the highest since 2001.

It's a signal for the approaching end of the current policy tightening cycle.

The Fed stated the pause intends to give a longer chance for recent policy decisions to manifest their impact on US data, even as inflation remains stubbornly away from 2%.

The Fed said it'll continue to monitor data closely, especially labor and consumer prices data and global financial developments to determine the best path ahead for policies.

Economic Outlook

The Federal Reserve's economic outlook report released yesterday included important modifications:

Growth is now revised to 2.1% this year from 1.0% in June forecasts, while 2024 growth forecasts are revised to 1.5%, and 2025 forecasts are revised to 1.8%.

Total inflation forecasts are revised to 3.3% this year, and 2.5% next year, and 2.2% in 2025.

Core inflation forecasts are revise to 3.7% this year, and 2.6% next year, and 2.3% in 2025.

The Fed maintained forecasts for target interest rates at 5.75%, hinting strongly at another interest rate hike this year.

Powell

Fed Chair Jerome Powell said Wednesday the process of controlling inflation is a long-term one, and interest rates are likely to remain high for an extended duration to bring inflation down.

He added that another interest rate hike won't impact the economy much but will help bring inflation towards the 2% medium target.

Jerome Powell expects inflation to reach the 2% target by the end of 2025, while remaining above 3% this year , adding the Fed is focused mainly on core inflation more than main inflation, which is influenced by volatile energy prices.