Crude oil markets ended on a positive note on Wednesday, September 6th, buoyed by expectations of a decline in US crude oil inventories. Adding to the market’s optimism were reports of Russian commitments and Saudi Arabia’s announcement of an extension of oil supply cuts until year-end.
The WTI (West Texas Intermediate) crude oil contract for delivery in October experienced an 85-cent surge, marking a 1% increase, and settling at $87.54 per barrel. This closing price was the highest since November 11, 2022. Meanwhile, BRENT crude futures saw a rise of 56 cents, equating to a 0.6% gain, with a closing price of $90.60 per barrel—the highest level recorded since November 16, 2022.
Notably, WTI oil futures achieved a nine-day consecutive closure in positive territory, the longest streak since the beginning of 2019. This impressive performance was largely attributed to mounting expectations of tight oil supply conditions in the global market. The bullish sentiment was further fueled by Saudi Arabia’s voluntary extension of oil production cuts by 1 million barrels per day, extending through the year’s end. Concurrently, Russia also prolonged its oil export cuts, maintaining a reduction of 300,000 barrels per day until the end of the year.
In addition to these supply-side factors, market participants eagerly anticipated a potential 5.5-million-barrel decline in US crude oil inventories for the week ending September 1. This awaited data release from the Energy Information Administration (EIA) promised to provide further clarity on market dynamics.
However, the market did face some headwinds during the day, primarily stemming from concerns about rising interest rates. This unease arose following the release of a stronger-than-expected service sector index in the United States. The data indicated that the inflationary pressures in the US could persist, potentially leading the Federal Reserve (Fed) to maintain higher interest rates for an extended duration.
The Institute for Supply Management (ISM) reported that its service sector index surged to 54.5 in August, surpassing analysts’ expectations of 52.5 and improving upon July’s figure of 52.7. This marked the eighth consecutive month of expansion in the US service sector, as the index remained above the pivotal 50-point threshold.
As oil markets continue to react to supply dynamics and macroeconomic trends, investors and analysts will closely monitor these factors for future price direction.
The Spot Market is Open
Thursday, September 7, 2023
| Energy Updated at | USD Price | Change | %Change |
| Crude Oil 13.30 | 87.24 | -0.30 | -0.34% |