Oil Gains Ground on Outlook for Global Deficit This Quarter

Oil edged higher, buoyed by widespread bets that global demand will continue to run ahead of supply.

(Bloomberg) — Oil edged higher, buoyed by widespread bets that global demand will continue to run ahead of supply.

West Texas Intermediate traded above $91 a barrel after gaining almost 30% in the previous quarter. Money managers boosted bullish wagers on the US crude benchmark to the highest since late 2021 last week, as speculators continue to anticipate tightening in the global crude market. 

There were mixed signals Monday around the restart of a key oil pipeline that runs from Iraq to Turkey. While a Turkish minister said the pipe was ready to operate, a senior Iraqi official said it can’t start until commercial issues between the two countries have been resolved. The pipe carries almost half a million barrels a day of crude and a restart would help ease some of the market’s ongoing tightness.

Oil has rallied since mid-June after the Organization of Petroleum Exporting Countries and its allies curbed crude supplies, Russia banned exports of diesel, and official US data confirmed a collapse in crude stockpiles at the vital hub in Cushing, Oklahoma. The upsurge — which has also been supported by robust demand – has rekindled speculation that $100-a-barrel pricing may return.

“If we look around the world there’s a lot of support for oil and gas,” Halliburton Co. Chief Executive Officer Jeff Miller said in a Bloomberg TV interview at the Adipec conference in Abu Dhabi. “I think we’ll continue to see tightening.”

Still, not everyone expects tighter balances. Citigroup Inc. said Brent would sink back into the low $70s a barrel next year as supply increased, pushing the market into a glut. “Higher prices in the near term could make for more downside for prices next year,” analysts including Ed Morse wrote in a note.

To get Bloomberg’s Energy Daily newsletter into your inbox, click here.

–With assistance from Elizabeth Low.

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.