Crude oil contracts continued their upward trajectory for the third consecutive day on Monday, September 18, bolstered by the prevailing belief that global oil supply is poised to face significant constraints. This surge in oil prices comes in the wake of key developments, including the extension of oil supply cuts by Russia and Saudi Arabia until the end of the year and reports indicating a decline in shale oil production in the United States.
WTI Crude Oil Futures: WTI crude oil futures displayed remarkable strength, climbing by 71 cents, equivalent to 0.8%, and settling at $91.48 per barrel. This closing price marked the highest level since November 7, 2022.
Brent Crude Oil Futures: Similarly, Brent crude oil futures experienced a notable increase, rising by 50 cents or 0.5%, and concluding at $94.43 per barrel. This closing price represented the highest level since November 11, 2022.
One of the pivotal factors supporting the bullish sentiment in the oil market is the decision by major oil-producing nations to extend their supply cuts. The International Energy Agency (IEA) anticipates that Saudi Arabia will prolong its voluntary oil production cuts, amounting to 1 million barrels per day, until the close of this year. Additionally, Russia has opted to continue reducing oil exports by 300,000 barrels per day until the end of the year. These coordinated efforts are expected to keep the global oil market under tight conditions throughout the fourth quarter of this year.
The U.S. Energy Information Administration (EIA) contributes to this optimistic outlook, as it forecasts a third consecutive monthly decline in regional U.S. shale oil production for October. This decrease is projected to reach its lowest point since May 2023, further reinforcing the notion of tightening oil supply.
Market analysts at Citigroup are bullish on oil prices, predicting that Brent crude oil could surge past the $100 per barrel mark within this year. Meanwhile, analysts at Bank of America foresee a similar trajectory, speculating that if OPEC Plus continues its production cuts until year-end, Brent crude oil prices could potentially surpass $100 per barrel before 2024.
Moreover, oil prices received an additional boost following positive economic indicators from China. In August, China’s industrial production exceeded expectations by expanding by 4.5% year-on-year, surpassing analysts’ projections of a 3.9% increase. Additionally, August retail sales in China rose by 4.6%, outperforming expectations of a 3% increase. These encouraging figures from the world’s second-largest economy further contributed to the optimism surrounding oil prices.
As oil markets respond to these various factors, investors and industry observers are keeping a close watch on developments that could potentially impact the trajectory of oil prices in the coming months. The outlook for the global oil market remains a topic of great interest and significance in the world of commodities and finance.
The Spot Market is Open
Tuesday, September 19, 2023
| Energy Updated at | USD Price | Change | %Change |
| Crude Oil 07.55 | 92.37 | +089 | +0.97% |