Oil extended an upswing as OPEC+ supply cuts tightened the market, with Saudi Energy Minister Prince Abdulaziz bin Salman due to address a conference on the kingdom’s crude policy and view on net zero.Global benchmark Brent advanced well above $US94 a barrel after a three-week run of gains that boosted prices by 11 per cent.
Crude in London is nearly 10 per cent higher year-to-date as the OPEC+ linchpins curb production and the demand outlook brightens, with the US potentially avoiding recession just as refiners in China go all-out. Against that backdrop, crude stockpiles have dropped, while speculators boosted net-bullish wagers on Brent and US benchmark West Texas Intermediate to a combined 15-month high.
“Focus is likely to turn to the Fed meeting this week, but growing supply tightness and eroding inventories are likely to continue underpinning bullish sentiment,” said Vandana Hari, founder of consultancy Vanda Insights.In the physical market, refined products such as diesel are increasingly showing warning signs, with the world’s refineries proving powerless to make enough of the industrial fuel. Prices have far outstripped those for crude.
Widely watched crude time spreads are also signalling tightness, with the gap between Brent’s two nearest contracts at US92¢ a barrel in backwardation. That’s the widest since November and reflects scarce near-term supplies. Still, other markers suggest a pullback could be in the offing after such a swift and marked move higher. Brent’s 14-day relative-strength index has been above 70 for nine of the past 10 sessions, pointing to the possibility that the rally could pause or retrace as traders digest gains.