Oil’s seven-week rally, fueled by growing signs of a tightening market, stalled near year-highs as technical barriers stymied further advances.
Crude has risen about 20% since late June as OPEC and its allies cut output, and the cartel’s most recent monthly report shows the market is on track to to a deficit of 2 million barrels per day this quarter. Crude oil’s fast spreads have widened to their biggest narrowing since November, and options markets have also turned more bullish.
Still, concerns about potential weakening consumption have capped gains, and West Texas Intermediate settled into nine-day overbought territory for the first time in three sessions on Wednesday. WTI futures fell below $83 a barrel after rising 3% over the previous two sessions.
“Funds have been big buyers the past three weeks, and they seem to be pausing here to verify that strong demand will continue,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Meanwhile, increasing geopolitical pressures add to supply insecurities. Tensions between Kiev and Moscow rose after a Ukrainian drone attacked a Russian-flagged oil tanker over the weekend in the Black Sea, a key waterway for the country’s exports.
Prices:
- WTI for September delivery fell $1.58 to settle at $82.82 a barrel in New York.
- Brent for October settlement fell $1.15 to settle at $86.40 a barrel.
