Oil prices jumped about 2% to a near 10-month high on Tuesday on a tighter supply outlook and OPEC optimism over the resilience of energy demand in major economies.
Brent futures rose $1.64, or 1.8%, to $92.28 a barrel by 11:15 a.m. EDT (1515 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.91, or 2.2%, to $89.20.
Both benchmarks remained technically overbought for an eighth straight day, on track for their highest settlements since November 2022.
The Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecasts for robust growth in global oil demand in 2023 and 2024, citing signs that major economies are stronger than expected. OPEC’s monthly report forecast world oil demand will rise by 2.25 million barrels per day (bpd) in 2024.
“Crude prices are rallying after the OPEC monthly report showed the oil market is going to be a lot tighter than initially thought,” Edward Moya, senior market analyst at data and analytics firm OANDA, said in a note.
Saudi Arabia and Russia last week extended voluntary supply cuts of a combined 1.3 million bpd to year end. OPEC, Russia and allied producers are known as OPEC+.
OPEC member Libya on Saturday shut four of its eastern oil export terminals due to a deadly storm. In OPEC+ member Kazakhstan, daily oil output fell to 213,800 metric tons on Sept. 11 from 243,500 tons the previous day as maintenance work began on the Karachaganak gas condensate field.
Oil traders are waiting for supply-demand forecasts from the U.S. Energy Information Administration’s (EIA) Short Term Energy Outlook (STEO) on Tuesday and the International Energy Agency (IEA) on Wednesday. U.S. oil inventory data is due on Tuesday from industry group the American Petroleum Institute (API) and the EIA on Wednesday.
Analysts polled by Reuters forecast a draw of about 2.0 million barrels of crude from U.S. stockpiles during the week ended Sept. 8. That would be the fifth straight weekly draw, the longest such streak since January 2022.
INTEREST RATES AND INFLATION
U.S., consumer price index data for August on Wednesday should hint at the outlook for interest rates. The Federal Reserve is widely expected to leave rates unchanged at a policy meeting next week, though views are split over whether it will raise rates in November.
The European Central Bank will announce its interest rate decision on Thursday.
Interest rate hikes can slow economic growth and reduce oil demand.
The European Commission on Monday forecast that the euro zone will grow more slowly than previously expected in 2023 and 2024.
