Oil Gains Ground on Outlook for Global Deficit in Final Quarter

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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