ALBAWABA – Oil prices rose for a third straight session on Monday, driven by forecasts of a widening supply deficit and optimism on recovering demand in China.
Brent crude futures rose $0.39 to $94.32 a barrel by 0253 GMT, according to Reuters, while the United States (US) West Texas Intermediate crude futures were at $91.30 a barrel, up $0.53.
Oil prices rallied as supply cuts by the Organization of Petroleum Exporting Countries and its allies (OPEC+) tightened the market, Bloomberg reported.
Both Saudi Arabia and Russia have extended supply and output cuts announced earlier this year until the end of December, which has buoyed oil prices.
The Saudi and Russian output cuts could push the market into a 2 million barrels per day (bpd) deficit in the fourth quarter, and a subsequent drawdown in inventories could leave the market exposed to further price spikes in 2024, ANZ analysts said in a note, carried by Reuters.
Oil prices rise on tighter supply and growing demand - Shutterstock
Global benchmark Brent advanced well above $94 a barrel after a three-week run of gains that boosted prices by 11 percent overall, according to Bloomberg.
"China's stimulus policy, resilient US economic data, and OPEC+’s ongoing output cuts are the bullish factors that support the oil market's upside movement," CMC Markets analyst Tina Teng told Reuters.
China’s central bank, on top of rate cuts, announced lowering the banking reserve ratios last week to boost liquidity and support its economy.
Global oil demand growth is on track to hit 2.1 million barrels per day, ANZ said, in line with forecasts from the International Energy Agency and OPEC.
In the physical market, refined products like diesel are increasingly showing warning signs, with the world’s refineries proving powerless to make enough of the industrial fuel. Prices have far outstripped those for crude, Bloomberg reported.
Widely-watched crude timespreads are also signaling tightness, with the gap between Brent’s two nearest contracts standing at $0.92 a barrel in backwardation. That’s the widest since November and reflects scarce near-term supplies.
