The U.S. crude-oil benchmark is poised to reach the $90-a-barrel threshold for the first time since November, driven by ongoing concerns about tight global crude supplies.
Price Action
- West Texas Intermediate crude (October delivery) rose $1.16, or 1.3%, to $89.68 a barrel on the New York Mercantile Exchange.
- November Brent crude, the global benchmark, increased by $1.14, or 1.2%, reaching $93.02 a barrel on ICE Futures Europe.
Market Drivers
Crude prices pulled back from their 2023 highs after the Energy Information Administration reported a larger-than-expected rise in U.S. crude inventories last week. Before the release of this data, oil prices had been rising due to the International Energy Agency’s forecast of a fourth-quarter deficit in global supply, supported by extended supply cuts from Saudi Arabia and Russia.
Stephen Innes, managing partner at SPI Asset Management, noted that the “remarkable display of pricing power” by OPEC+ has successfully increased prices without significantly affecting demand. This pricing prowess is attributed to OPEC+’s substantial market share and its alliance with Russia, as well as the financial discipline observed in the U.S. shale industry.
As long as OPEC+ maintains production and export curbs, oil prices are expected to remain strong until high prices lead to a decrease in demand at the gasoline pump.