Oil posted a second straight weekly gain after supply curbs by OPEC+ leaders Saudi Arabia and Russia were extended for the rest of the year.
In addition to an already tight fuel market, Russia plans to cut diesel exports from its main western ports by a quarter this month and keep more supplies at home due to seasonal refinery maintenance. The news sent diesel futures higher, outpacing gains in crude oil.
The underlying metrics of the oil market complex point to tougher conditions after OPEC+ leaders extended their production cuts. The December-to-December spread in West Texas Intermediate, a favored oil hedge fund trade, has strengthened to the highest since late 2022.
Oil remains higher this quarter amid OPEC+ supply cuts. Still, some banks remain cautious, and analysts at JPMorgan Chase & Co., including Natasha Kaneva, say crude is unlikely to see $100 a barrel this year amid limited demand. With the OPEC+ decisions now known, the outlook will change on how central banks will continue to fight inflation.
“Oil prices continue to rise, defying negative risk sentiment and the strong US dollar,” said Jens Pedersen, head of oil and commodities research at Danske Bank. “Tight supply will remain a key factor, but starting next week, big rate decisions from the ECB and the Fed will likely steal the spotlight.”
Prices:
- WTI for October delivery rose 64 cents to settle at $87.51 a barrel in New York.
- The US benchmark is 2.3% higher this week after a 7.2% rise in the previous five-day period.
- Brent for November settlement gained 73 cents to $90.65 a barrel.
