Oil futures rose Friday, trading near 2023 highs, as closely followed forecasts affirmed expectations for a large supply deficit over the final half of the year.
Price action
-
West Texas Intermediate crude for September delivery
CL00,
+0.71%CLU23,
+0.71%
rose 32 cents, or 0.4%, to $83.14 a barrel on the New York Mercantile Exchange. -
October Brent crude
BRN00,
+0.71%BRNV23,
+0.71%,
the global benchmark, was up 37 cents, or 0.4%, at $86.77 a barrel on ICE Futures Europe. -
Back on Nymex, September gasoline
RBU23,
+1.25%
rose 0.5% to $2.92 a gallon, while September heating oil
HOU23,
+1.12%
was up 0.5% at $3.17 a gallon. -
September natural gas
NGU23,
-0.11%
gained 1.8% to $2.814 per million British thermal units.
Market drivers
Gains for WTI and Brent were putting the crude oil benchmarks on track for a seventh straight weekly rise. In its monthly report, released Friday, the International Energy Agency said crude supplies would tighten further into the fall as Saudi Arabia and Russia continue supply cuts.
“Deepening OPEC+ supply cuts have collided with improved macroeconomic sentiment and all-time high world oil demand,” the report said.
If the bloc’s current targets are maintained, “oil inventories could draw by 2.2 mb/d (million barrels a day) in 3Q23 and 1.2 mb/d in the fourth quarter, with a risk of driving prices still higher,” the agency said.
The IEA said it expects oil supplies to rise by 1.5 million barrels a day next year, 300,000 barrels a day more than it was expecting last month. That’s expected to be driven by production increases in the U.S., Brazil and Guyana.
See: IEA raises oil supplyfForecasts as U.S. producers counter OPEC+ cuts
WTI closed Wednesday at its highest since November, while Brent finished at its highest since early January.
“On the charts, oil did break out to the upside from the 2023 trading range this week but WTI futures had become overbought on the daily time frame and some consolidation or a pullback towards the $80 level should not come as a surprise,” wrote analysts at Sevens Report Research, in a Friday note.
They want to see recent highs surpassed to confirm a new uptrend is in place and that the midweek rally “was not just a ‘head fake’ as recession worries remain a major headwind on the energy complex,” they wrote.
