US benchmark oil prices steadied after briefly surging to $95 a barrel as dwindling stockpiles at a key storage hub fanned fears about falling global crude supplies.
(Bloomberg) — US benchmark oil prices steadied after briefly surging to $95 a barrel as dwindling stockpiles at a key storage hub fanned fears about falling global crude supplies.
The latest leg higher was led by a decline in inventories at Cushing, Oklahoma, the delivery point for US futures, where supplies are flirting with minimum operational levels. The situation has sent key price gauges surging amid fears of scarcity, a move that’s rippling across the world. Overall US crude stockpiles also fell more than expected, providing evidence of how rapidly the market is tightening due to supply cuts from Saudi Arabia and Russia.
West Texas Intermediate touched the highest level since August 2022 last year before the rally took a breather. The nearest timespreads for WTI and global benchmark Brent are in extreme bullish structures as traders pay bumper premiums to keep crude supplies local. Options trading is also showing concerns about bigger price swings.
“It really all boils down to concerns over supply tightness continuing and even exacerbating going into the northern hemisphere winter months,” Vandana Hari, founder of consultancy Vanda Insights, said on Bloomberg TV. “You have a market which is very tightly strung right now, almost on the verge of panic.”
West Texas Intermediate has rallied about 30% since the end of June and is approaching the biggest quarterly gain since June 2020, when prices gyrated in the early months of the pandemic. Brent has topped $97 in intraday trading this week.
Earlier this month, OPEC forecast a market deficit of as much as 3 million barrels of crude a day in the fourth quarter. With demand in the US and China proving resilient, many in the market now see $100 oil as inevitable, even as the dollar rallies and worries about high global interest rates persist.
Demand appears to be holding up amid the higher prices. Global consumption of transport fuels picked up last week, lifted by Chinese trucking activity and an increase in international travel ahead of the Golden Week holiday, JPMorgan Chase & Co. said in a note.
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