September 18, 2023 (MLN): Oil prices extended their upward momentum on Monday driven by forecasts of a widening supply deficit in the last quarter of 2023 and optimism about a demand recovery in China, the world's top crude importer.
Brent crude is currently trading at $93.89 per barrel, up by 0.34% on the day.
While West Texas Intermediate crude (WTI) is trading at $90.60 per barrel, up by 0.30% on the day.
To note, both benchmarks surged by around 4% last week.
"China's stimulus policy, resilient U.S. economic data, and OPEC+’s ongoing output cuts are the bullish factors that support the oil market's upside movement," CMC Markets analyst Tina Teng said, referring to a reserve ratio cut by China's central bank last week to boost liquidity and support its economy, as Reuters reported.
Traders will be watching decisions and commentary by central banks, including the U.S. Federal Reserve, this week on interest rate policies, and key economic data out of China.
Brent and WTI have climbed for three consecutive weeks to touch their highest levels since November and are on track for their biggest quarterly increase since Russia's invasion of Ukraine in the first quarter of 2022.
The Saudi and Russian output cuts could push the market into a 2 million barrels per day (bpd) deficit in the fourth quarter, and a subsequent drawdown in inventories could leave the market exposed to further price spikes in 2024, ANZ analysts said in a note.
Saudi Arabia and Russia extended supply cuts to the end of the year as part of the OPEC+ group's plans, and as Chinese refineries ramped up output, driven by strong export margins.
"It seems like prices will easily find a home above the $90 a barrel level, which means the focus might shift to the demand outlook from the world's two largest economies," said Edward Moya, an analyst at OANDA.
Global oil demand growth is on track to hit 2.1 million bpd, ANZ said, in line with forecasts from the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC).
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Posted on: 2023-09-18T10:47:50+05:00
