Brent crude closed near a 10-month high, extending a rally fueled by supply curbs from OPEC+ leaders.
Gains in recent sessions have been accompanied by a jump in key timeframes suggesting the market is undersold, while bullish call options are also becoming more expensive.
Still, oil’s ascent into overbought territory leaves the market vulnerable to a correction. Earlier in the session, crude fell more than $1 after Saudi Aramco CEO Amin Nasser cut the company’s long-term demand outlook and Saudi Energy Minister Prince Abdulaziz bin Salman, said “the jury is still out” on China’s consumption. Despite the statements, both Nasser and Prince Abdulaziz expressed confidence in the market.
“The latest buying frenzy has driven prices too high and too fast, so any kind of negative news can trigger a dramatic sell-off,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities. “But the overall fundamentals remain tight on the supply side. Until the true fundamentals change, the market will look resistant to long-term selling.”
In the physical market, refined products such as diesel are increasingly showing signs of tightness, and the world’s refineries are unable to produce enough industrial fuel. Prices have far exceeded those of crude oil.
Oil has risen about 10% this year thanks to OPEC+ curbs, and speculators have increased bullish bets on Brent and US benchmark West Texas Intermediate to a combined high of 15 months The increase looks set to add to inflationary pressures around the world as central banks try to determine whether to keep raising interest rates. This will be an important week for monetary policy, with decisions from the Fed and the Bank of England, among others.
Prices:
- WTI for October delivery rose 71 cents to settle at $91.48 a barrel in New York.
- Brent for November settlement rose 50 cents to settle at $94.43 a barrel.
– With the assistance of Alex Longley.
