Oil posted its longest winning streak since mid-2022 as several reports predicting increased demand gave fresh impetus to a rally based on rising risks of supply disruptions and Saudi production cuts.
Among the bullish projections was a monthly IEA report on Friday that said global oil demand rose to a record in June and could rise further in August amid strong Chinese consumption. A monthly OPEC report on Thursday forecast markets will experience a sharp supply shortfall of more than 2 million barrels per day this quarter.
Meanwhile, supply concerns that have fueled oil’s rally since late June have yet to abate. Traders are closely watching the possible disruption of Russian exports to the Black Sea following recent escalations in the war with Ukraine. On Tuesday, OPEC leader Saudi Arabia reaffirmed its commitment to voluntarily curb supplies next month.
West Texas Intermediate rose to above $83, cementing a seven-week winning streak that is its longest since June 2022. Futures hit their highest intraday level since November on Thursday.
Oil has rallied since late June on cuts from Saudi Arabia, helped by export curbs from OPEC ally + Russia. Traders also continue to monitor the broader economic outlook as the impact of the Federal Reserve’s aggressive rate hike cycle continues to weigh on markets, but JPMorgan Chase & Co. said on Friday that prices could reach $90 in September.
“We believe prices will continue to rise from here to $90,” analysts including Natasha Kaneva wrote in a note, referring to benchmark Brent. “Key market indicators point to a rapidly tightening physical market.”
Prices:
- WTI for September delivery rose 37 cents to settle at $83.19 a barrel in New York.
- Brent for October settlement advanced 41 cents to settle at $86.81 a barrel.
In the first step in an emerging deal between Washington and Tehran, Iran has moved four US citizens from prison to house arrest. The deal could lead to more barrels of the OPEC producer hitting the market. However, on Friday, Homeland Security spokesman John Kirby said the two countries were not in active negotiations on the nuclear program.
The tightness is flowing into downstream fuel markets, with a type of oil left over from oil refining costing more than crude in Europe for the first time in decades. Gasoline and diesel prices are also well above seasonal norms, partly as a result of refinery production constraints.
