Oil opened the new quarter on the front foot, pushing higher on widespread bets that global demand is running ahead of supply.
(Bloomberg) — Oil opened the new quarter on the front foot, pushing higher on widespread bets that global demand is running ahead of supply.
West Texas Intermediate advanced above $91 a barrel after soaring 29% in the three months to September, the biggest third-quarter gain in almost two decades. Holidays in many Asia-Pacific nations on Monday, including China and India, may constrain trading volumes in risk assets such as commodities.
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.
There’s a lot of support for oil prices and the market will continue to tighten, Halliburton Co. Chief Executive Officer Jeff Miller said in a Bloomberg TV interview at the Adipec conference in Abu Dhabi.
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.
Widely watched metrics point to tighter conditions. WTI’s prompt spread — the gap between its two nearest contracts — was near $2 a barrel in backwardation, a bullish pattern. That compares with 80 cents a barrel a month ago.
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