Oil sears to 10-month high, set for weekly gain on tight supply; Brent scores $94/bbl-mark

WTI futures were up 45 cents, or 0.5 per cent, to $90.61 a barrel and Brent futures were up 4 cents to $93.74 a barrel. Brent futures rose to a 10-month high as $94.63 earlier in the session, their highest since November 2022. 

Both contracts are up about 4 per cent for the week, and on pace for their biggest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022, according to news agency Reuters. Oil refinery processing rose by nearly a fifth from a year earlier as processors kept run rates high to capitalise on high global demand for oil products.

Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a September 19 expiry, were last trading higher by 0.44 per cent at ₹7,534 per bbl, having swung between ₹7,417 and ₹7,568 per bbl during the session so far, against a previous close of ₹7,501 per barrel.

What’s driving the rally in crude oil prices?

-Earlier this month, oil producers Saudi Arabia and Russia extended their voluntary oil output cuts of a combined 1.3 million barrels per day (bpd) to the end of the year which resulted in a sharp surge in international crude prices – reaching a 10-month high peak. The supply concerns have pushed the Brent and WTI benchmarks to their highest levels since November.

-These are on top of the April cuts agreed by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) running to the end of 2024. Ending the week, oil gained almost 1 per cent to a nine-month high on Friday on rising US diesel futures and worries about tighter supplies.

-The European Central Bank on Thursday implemented a tenth consecutive hike in the interest rates, pushing the benchmark deposite rate to 4 per cent – the highest since the intruduction of Euro since 1999, but implied that it was likely to stop there. On Friday, however, it said another hike was not off the table.

-China, the world’s biggest oil importer, is considered crucial to oil demand growth over the rest of the year. Its economy’s sluggish post-pandemic recovery has raised demand concerns, but industrial output and retail sales grew at a faster than expected rate in August.
 

Technical View

Domestic brokerage firm Religare Broking has neutral sentiments on MCX Crude Oil. ‘’MACD Bullish divergence suggest uptrend. Sustained trades above 7,600 region may strengthen the momentum. A dip below 7,470 may induce weakness for the day,” said the brokerage firm in its research report. Religare sees technical levels between ₹7,130 – ₹7,980. The turnaround is seen at ₹7,470.

Updated: 15 Sep 2023, 09:58 PM IST