Oil futures headed higher Monday, building on 2023 highs after posting a third consecutive weekly climb on continued concerns over tightening crude supplies.
Price action
-
West Texas Intermediate crude
CL00,
+1.22%
for October delivery
CL.1,
+1.32%CLV23,
+1.32%
rose 79 cents, or 0.9%, to $91.56 a barrel on the New York Mercantile Exchange. -
November Brent crude
BRN00,
+0.86%BRNX23,
+0.86%,
the global benchmark, was up 64 cents, or 0.7%, at $94.57 a barrel on ICE Futures Europe. -
October gasoline
RBV23,
+0.11%
added 0.1% to $2.7152 a gallon, while October heating oil
HOV23,
-0.52%
declined 0.2% to $3.3758 a gallon. -
October natural gas
NGV23,
+3.03%
edged 0.1.6% higher to $2.685 per million British thermal units.
Market drivers
Oil has “maintained its momentum thanks to the existence of some potential green shoots among the Chinese macroeconomic indicators,” said Tim Waterer, chief market analyst at KCM Trade. That data included an improvement in China’s industrial production and consumption last month and 4.6% year-on-year growth in retail sales in August.
The WTI contract is “attempting to make a home above the $90 per barrel level,” said Waterer, in emailed commentary.
“The technical indicators are starting to look a little stretched,” he said. “Nonetheless, supply-side cuts should limit any downside moves for the time being in the oil market.”
WTI rose 3.7% last week, while Brent advanced 3.6%; both grades ended Friday at their highest since November. Crude has been on a tear since summer, recovering from an early 2023 selloff as expectations for tight second-half supplies overshadowed worries over the economic recovery in China, the world’s second-biggest oil consumer.
Read: Consumers take notice as inflation bites and oil prices top $90 a barrel
A decision by Saudi Arabia to cut production by 1 million barrels a day beginning in July has played a major role in pushing crude higher. The cut was recently extended through the end of the year, while Russia has also moved to curb supplies by 300,000 barrels a day over the same stretch.
“What’s striking is that this relentless oil price rally has taken place even amid concerns about lower demand from Europe and China as those economies grapple with a severe slowdown, which demonstrates just how tight the supply side of the equation has become,” Marios Hadjikyriacos, lead investment analyst at XM, said in a note.
“The fact that oil rallied on Friday despite the risk-off tone in equity markets adds credence to this notion,” he wrote.
