Futures Movers: Oil prices extend rise on supply worries

Posted By: EN Todayon: September 13, 2023In: General Energy News, Oil & Gas News

Oil futures rose Wednesday, building on 2023 highs, on continued concerns over tight supplies.

Price action

West Texas Intermediate crude for October delivery
CL00,
+0.36%

CLV23,
+0.36%
rose 60 cents, or 0.7%, to $89.44 a barrel on the New York Mercantile Exchange.
November Brent
BRN00,
+0.35%

BRNX23,
+0.35%
was up 60 cents, or 0.7%, at $92.66 a barrel on ICE Futures Europe.

Market drivers

In its monthly report, the Paris-based International Energy Agency said that cuts from Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have taken 2.5 million barrels a day of crude off the market since January. The cuts have largely been offset by record supply coming from the U.S. and Brazil, with non-OPEC supply up 1.9 million barrels a day.

But the decision by Saudi Arabia and Russia to cut supplies by a combined 1.3 million barrels a day through year-end means the market is now likely to see a deficit of about 1.1 million barrels a day through the fourth quarter, the IEA said.

The IEA report comes after OPEC’s monthly update on Tuesday left forecasts for supply growth in 2023 and 2024 unchanged.

“On balance, the absence of sizable downward revisions to global oil demand over the next two years, despite recession risks, helped the oil market power on to new
highs. Futures have become overextended to the upside and are in technically overbought territory on the daily time frame charts, leaving the market susceptible to a profit-taking pullback in what is otherwise a still clearly upwardly trending energy market,” analysts at Sevens Report Research said in a note.

A hot U.S. consumer-price index reading for August on Wednesday morning or a bearish weekly supply report from the Energy Information Administration could serve as a catalyst for a pullback,” they wrote.

The American Petroleum Institute late Tuesday said crude inventories rose by 1.2 million barrels last week, according to a source citing the figures.

Analysts surveyed by S&P Global Commodity Insights, on average, expect the EIA report to show U.S. crude supplies fell by 1 million barrels last week, with gasoline stocks expected to fall 1.4 million barrels. Distillate inventories are seen flat.