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Economy

Economy

Oil prices rise on supply deficit concerns

Flue gas and steam rise out of chimneys and smokestacks of an oil refinery during sunset on a frosty... Flue gas and steam rise out of chimneys and smokestacks of an oil refinery during sunset on a frosty day in the Siberian city of Omsk, Russia, February 8, 2023. REUTERS/Alexey Malgavko
Flue gas and steam rise out of chimneys and smokestacks of an oil refinery during sunset on a frosty... Flue gas and steam rise out of chimneys and smokestacks of an oil refinery during sunset on a frosty day in the Siberian city of Omsk, Russia, February 8, 2023. REUTERS/Alexey Malgavko

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Oil prices rise on supply deficit concerns. Oil prices increased for the fourth straight session on Tuesday as sluggish U.S. shale output raised concerns about a supply deficit caused by Saudi Arabia and Russia’s extended production restrictions.

By 0630 GMT, U.S. West Texas Intermediate crude prices increased 98 cents, or 1.1%, to $92.46, while Brent crude futures rose 46 cents, or 0.49%, to $94.89 a barrel.

Prices have risen for three weeks and are around 10-month highs for both benchmarks.

The EIA reported Monday that U.S. oil output from top shale-producing regions is expected to decrease to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023. It will have fallen three months straight.

The projections come after Saudi Arabia and Russia extended 1.3 million barrels per day (bpd) production curbs to the end of the year this month.

Concerns over supply shortages and technical considerations are supporting prices, said OANDA Singapore senior market analyst Kelvin Wong.

“(There has been) a persistent short-term uptrend seen in WTI crude oil futures where prior dips had been held by its 5-day moving average since 29 August…(which is) now acting as a key short-term support at around $89.90 per barrel,” Wong said
“Oil’s ascent into overbought territory leaves the market vulnerable to a correction,” National Australia Bank analysts wrote in a client note after Saudi Aramco CEO Amin Nasser and Saudi Arabia’s energy minister spoke on Monday, predicting turbulence.

The Aramco CEO cut its long-term demand prediction to 110 million bpd by 2030 from 125 million.

On Monday, Energy Minister Prince Abdulaziz bin Salman defended OPEC+ cuts to oil market supply, saying international energy markets need light-handed regulation to limit volatility and warn of uncertainty about Chinese demand, European growth, and central bank inflation action.


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