Oil rose for a third straight week as the market continued to tighten due to production cuts by Saudi Arabia and Russia.
West Texas Intermediate settled near $91 a barrel on Friday, the highest since November. The International Energy Agency and the Organization of the Petroleum Exporting Countries warned this week that the market would be in deficit until the end of the year, helping to push prices up 3.7% from the close of last Friday
Widely watched schedules continue to indicate a supply shortfall. The gap between the two nearest WTI contracts reached 84 cents a barrel in the intraday bullish pullback, also the highest level since November.
On the demand side, the outlook has improved with signs that the US could avoid a recession, while data from China on Friday beat economists’ estimates, suggesting the worst of the recession is over . The tightening of the market is also reflected in rising fuel prices, with diesel at a seasonal record in New York.
Crude has risen more than 30% since mid-June, and analysts’ predictions of $100 a barrel are less rare. Still, there are technical signs that the rally is overdone. Brent’s 14-day relative strength index has been above the threshold, indicating a possible pullback for much of the past two weeks.
“Crude price and flat structure continue to break,” said Keshav Lohiya, founder of consultancy Oilytics. “The oil market is now firmly in OPEC’s hands as it is up to Saudi Arabia when to start reversing some of these voluntary cuts.”
Prices:
- West Texas Intermediate for October rose 61 cents to settle at $90.77 a barrel in New York.
- Brent for November settlement was up 23 cents at $93.93 a barrel.
