Oil steadied after rising to a 10-month high as broader risk-off sentiment cooled a rally fueled by OPEC+ supply cuts and comments from the minister of ‘Energy of Saudi Arabia that prevented any change of course.
The shrinking supplies have prompted a flurry of predictions that oil could return to $100 on a list that includes industry heavyweights such as Chevron Corp. Chief Executive Officer Mike Wirth and traditional bears Citigroup Inc.
Global benchmark Brent futures neared $96 a barrel for the first time since November before paring gains to settle at $94.34.
“The new upside target” is near $95 for U.S. futures, Dennis Kissler, senior vice president of trading at BOK Financial Securities, wrote in a note to clients. “That said, no market goes up forever, and at these levels crude oil futures are very vulnerable to any negative news that could lead to a major ‘overbought’ correction.”
The latest upswing has been marked by large movements in the time periods, some of the most followed indicators in the market. Brent and West Texas Intermediate are now trading in a pullback, a bullish pattern indicating tight supplies, above $1 at the top of the curve. That comes as real-world barrel premiums rise, particularly in the United States, traders and brokers said.
Crude has soared by nearly a third since mid-June, with Riyadh and Moscow joining forces to cut exports in a bid to deplete inventories and spur a rebound in prices. The improved outlook for the world’s two largest economies, the US and China, has also supported the advance. The relentless rise in oil has been one of the prominent features of commodity markets in the current quarter.
On Monday, Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, told a conference in Canada that the Organization of the Petroleum Exporting Countries was working to keep markets stable and improve energy security, without setting a specific price Exit plans will be reviewed every month, he said.
Rising energy costs look set to add to inflationary pressures, complicating the task facing central banks. Federal Reserve policymakers began their two-day meeting on Tuesday, while officials from the Bank of England and the Bank of Japan are also scheduled to meet this week. Rising prices also pose a political challenge for the Biden administration, with average retail gasoline prices already at a seasonal record in data dating back to 2004.
Prices:
- West Texas Intermediate for October delivery fell 28 cents to settle at $91.20 a barrel in New York.
- Brent for November settlement fell 9 cents to settle at $94.34.
