Brent crude futures, the global oil benchmark, experienced an increase of 41 cents, equivalent to 0.43%, reaching $94.84 per barrel by 0751 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures showed a substantial gain of 92 cents, or 1.01%, reaching $92.40 per barrel after surpassing the $1 mark.
This surge in oil prices follows three consecutive weeks of gains, with both Brent and WTI benchmarks reaching their highest levels in approximately 10 months.
The U.S. Energy Information Administration (EIA) reported that U.S. oil output from major shale-producing regions is on track to decline to 9.393 million barrels per day (bpd) in October, marking the lowest level since May 2023. This will signify a third consecutive monthly decline.
These developments coincide with Saudi Arabia and Russia’s recent decision to extend a combined 1.3 million bpd supply cut agreement until the end of the year.
Kelvin Wong, a senior market analyst at OANDA in Singapore, attributed the price support to concerns regarding supply constraints and technical factors. He noted a persistent short-term uptrend in WTI crude oil futures, highlighting the significance of the 5-day moving average acting as a key short-term support level at around $89.90 per barrel.
However, some analysts have raised concerns about oil’s ascent into overbought territory, which could leave the market vulnerable to a correction. This comes in the wake of speeches by Saudi Aramco CEO Amin Nasser and Saudi Arabia’s energy minister on Monday, introducing an element of volatility.
Aramco’s CEO adjusted the company’s long-term demand outlook, forecasting global demand to reach 110 million bpd by 2030, down from the previous estimate of 125 million bpd.
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman defended OPEC+ cuts to oil supply, advocating for light-handed regulation in international energy markets to limit volatility. He also expressed uncertainties regarding Chinese demand, European growth, and central bank actions to combat inflation.
The upcoming interest rate decisions from central banks including the U.S., Britain, Japan, Sweden, Switzerland, and Norway are expected to add to the existing market uncertainty, further intensifying the clash between reduced supply and economic outlook concerns.