Benchmark US crude oil rose above $90 a barrel for the first time since November, the latest milestone in a rise fueled by output cuts from Saudi Arabia and Russia amid a consumption world record
This week, the International Energy Agency warned that continued supply cuts by the two OPEC+ leaders are likely to create a “significant supply shortfall” and threaten further price volatility. That report came a day after OPEC said the market faces a shortfall of more than 3 million barrels a day next quarter, potentially the biggest in more than a decade.
With prices up more than 30% since the end of June, traders are bracing for a potential pullback as technical indicators like the Relative Strength Index show futures near overbought territory. West Texas Intermediate is seeing near-term resistance at $90.04 a barrel, wrote Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Demand in the US and China, the two biggest consumers, remains strong, while OPEC+ leaders Saudi Arabia and Russia are tightening supplies. The rebound is a boost to the economies of oil-producing nations, but it is raising fresh questions about whether crude prices will derail efforts by central banks around the world to suppress inflation.
Signs of near-term strength are plentiful at the moment. Some physical grades are imposing large premiums on their benchmarks, indicating that refiners are snapping up barrels. Meanwhile, fuels are trading well above crude oil prices as processors try to keep pace with strong end-user demand.
Prices:
- WTI for October delivery rose $1.64 to settle at $90.16 a barrel in New York.
- Brent for November settlement gained $1.82 to settle at $93.70.
