Oil prices fell after a nine-session rally, boosted by renewed production cuts by the leaders of the OPEC+ alliance, which pushed futures into overbought territory.
West Texas Intermediate settled below $87 a barrel after the longest stretch of gains since January 2019. The rise came as Saudi Arabia and Russia pledged to extend their export curbs for the fourth quarter.
Crude now faces headwinds from broader markets, with the dollar on track for an eighth straight week of gains. WTI was also trading in overbought territory, based on its relative strength index, leaving traders braced for a technical correction.
The OPEC+ cuts come at a time when US gasoline prices are at their highest seasonal level in a decade. Motor fuel supplies may not recover as soon as refineries enter their fall maintenance period, where diesel production is prioritized. A further hike in the price of petrol threatens to squeeze consumers and risks derailing central banks’ efforts to curb inflation.
Meanwhile, U.S. crude inventories and inventories at the Cushing, Oklahoma facility fell to their lowest levels since December. Signs of a stronger physical market are underscored by a robust curve structure.
“While some may argue that the kingdom’s messages earlier this week are a stark reminder to short sellers not to position themselves against the Central Bank of oil, some may argue that the recent tightening of the physical market is artificial in place of the organic forces of the market at work”. Royal Bank of Canada analysts, including Michael Tran and Helima Croft, said in a note, referring to Saudi Arabia.
Prices:
- WTI for October delivery was down 67 cents at $86.87 a barrel in New York.
- Brent for November settlement fell 68 cents to settle at $89.92 a barrel.
