Oil Rally Accelerates as WTI Tops $90

Benchmark US crude oil settled above $90 a barrel for the first time since November, the latest milestone in a surge driven by output cuts from Saudi Arabia and Russia amid record global consumption.

This week, the International Energy Agency warned that continued supply cuts by the two OPEC+ leaders are likely to create a “significant supply shortfall” and threaten further price volatility. That report came a day after OPEC said the market is facing a deficit of more than 3 million barrels a day next quarter, potentially the biggest in more than a decade.

With prices soaring more than 30% since late June, traders are bracing for a potential pullback as technical gauges such as the relative strength index show futures near overbought territory. West Texas Intermediate is now seeing near-term resistance at $90.04 a barrel, wrote Dennis Kissler, senior vice president for trading at BOK Financial Securities.

Demand in the US and China — the top two consumers — remains robust while OPEC+ leaders Saudi Arabia and Russia constrict supplies. The rally is a boost to the economies of oil-producing nations, but is raising fresh questions over whether crude prices will derail efforts by central banks across the globe to quash inflation. 

Signs of near-term strength are abounding at the moment. Some physical grades are commanding hefty premiums to their benchmarks, indicating that refiners are snapping up barrels. Meanwhile, fuels are trading far above crude prices as processors try to keep pace with strong end-user demand.

Prices:

• WTI for October delivery rose $1.64 to settle at $90.16 a barrel in New York.
• Brent for November settlement gained $1.82 to settle at $93.70.