Oil prices were little changed after a nine-session rally — driven by renewed production cuts from leaders of the OPEC+ alliance — propelled futures into overbought territory.
(Bloomberg) — Oil prices were little changed after a nine-session rally — driven by renewed production cuts from leaders of the OPEC+ alliance — propelled futures into overbought territory.
West Texas Intermediate hovered near $87.50 a barrel after the longest stretch of gains since January 2019. That surge came as Saudi Arabia and Russia pledged to prolong their export curbs through the fourth quarter.
Meanwhile, US crude stockpiles fell 6.3 million barrels last week to the lowest since December, according to an Energy Information Administration report. Inventories also shrank at the nation’s biggest storage hub in Cushing, Oklahoma, reaching the lowest levels in nine months.
The OPEC+ cuts come at a time when US gasoline prices are at the highest seasonal level in a decade. Supplies of the motor fuel may not rebound soon as refiners enter their fall maintenance period, where diesel production is prioritized. A renewed gasoline price spike threatens to squeeze consumers and risks derailing central bankers’ efforts to tamp down inflation.
Crude faces headwinds from wider markets, with the dollar on track for an eighth consecutive week of gains, which would be the longest run of increases in data going back to 2005. For now though, a stronger physical market — underscored by a robust curve structure — is leading sentiment, with prices near their highs for the year.
“While some can argue that messaging from the kingdom earlier this week is a stark reminder to short sellers to not position against the Central Bank of oil, some may argue that the recent physical market tightness is artificial rather than organic market forces at work,” Royal Bank of Canada analysts including Michael Tran and Helima Croft said in a note, referencing Saudi Arabia.
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