Oil climbed, marking a resumption of a price rally that has been fueled in part by hedge fund wagers that supplies will tighten.
(Bloomberg) — Oil climbed, marking a resumption of a price rally that has been fueled in part by hedge fund wagers that supplies will tighten.
West Texas Intermediate futures rose as much as 0.9% to trade above $90 a barrel. Speculators boosted their bullish positions on WTI to the highest since February 2022, while key gauges on the nearest part of the futures curve have rallied in recent days, pointing to striking market tightness. Some real-world barrels continue to command hefty premiums.
Oil has added about a quarter since end-June, with prices set for the biggest quarterly gain since March 2022 thanks to supply curbs from OPEC+ linchpins Saudi Arabia and Russia, and brighter outlooks in the two biggest economies, the US and China. The surge has rekindled talk of the possibility of $100-a-barrel crude, while increasing price pressures in importers.
“We have long been advocating for a tight oil-market balance,” said Arne Lohmann Rasmussen, head of research at A/S Global Risk Management. “Given the fundamental picture, we believe the probability of a significant new setback in prices has decreased. Hence, we believe that the current level is a buying opportunity.”
There are plenty of signs of tightness in the physical market. Russia last week announced a temporary ban on diesel and gasoline exports, lifting fuel prices. In addition, US crude stockpiles fell again last week and stocks at the storage hub of Cushing, Oklahoma are very low.
China, meanwhile, is gearing up for the Golden Week holiday from Friday, with the longer-than-usual break set to boost demand for jet fuel in the biggest oil importer. More than 21 million people are expected to fly during the eight days, following record air-passenger traffic in July and August.
To get Bloomberg’s Energy Daily newsletter into your inbox, click here.
–With assistance from Sarah Chen.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.