Oil steadied around $91 a barrel, set to cap the largest quarterly rally since the initial jolt from the war in Ukraine, as lower Russian fuel exports threaten to further tighten a market wrestling with OPEC+ production cuts.
(Bloomberg) — Oil steadied around $91 a barrel, set to cap the largest quarterly rally since the initial jolt from the war in Ukraine, as lower Russian fuel exports threaten to further tighten a market wrestling with OPEC+ production cuts.
Industry data released Friday show Russia is planning almost no diesel exports next month as the country bans shipments overseas to reduce domestic prices. The move sent European diesel futures rallying back above the psychologically key level of $1,000 a ton.
US benchmark crude futures are headed for their biggest quarterly gain since the period ended in March 2022 on Saudi-led OPEC+ supply cuts and critically low stockpiles at the Cushing hub in the US. On Friday, West Texas Intermediate reversed its earlier gains and slipped to around $91, largely tracking swings in US equities.
Many of this week’s most significant market moves have come away from headline prices. Key timespreads have exploded higher as fears about the availability of US supplies boost crude prices globally. Meanwhile, gasoline’s premium over crude in the US has plunged in a potential sign that higher crude prices are starting to impinge on margins.
Even with traders casting a wary eye on the demand outlook, there is little to obstruct crude’s march toward $100 a barrel as OPEC forecasts a supply deficit at 3 million barrels a day next quarter.
“Oil for short-term delivery is being traded at a significant premium, which is an indication of tight supply,” Commerzbank AG analysts, including Barbara Lambrecht, said in a report. “At the same time, demand for oil is continuing to grow. This is tightening the oil market, as evidenced by declining inventories.”
China’s Golden Week holidays, which run through next Friday, are expected to boost consumption as more people fly domestically and on international routes.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.