Oil prices continued to rise on Tuesday, marking the fourth consecutive session of gains, driven by concerns over a supply deficit. Weak shale oil production in the United States added to these concerns, which have been exacerbated by extended production cuts by Saudi Arabia and Russia.
U.S. West Texas Intermediate (WTI) crude futures increased by 1.1%, or 99 cents, reaching $92.47, while the global oil benchmark, Brent crude futures, rose by 0.61%, or 58 cents, reaching $95.01 per barrel by 0400 GMT.
This recent surge has led to oil prices reaching their highest levels in nearly ten months for both WTI and Brent crude.
The U.S. Energy Information Administration (EIA) reported that U.S. oil output from major shale-producing regions is expected to decline to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023. This will mark the third consecutive monthly decline.
The concerns over supply deficits come after Saudi Arabia and Russia decided to extend a combined 1.3 million barrels per day (bpd) of supply cuts through the end of the year.
However, analysts from National Australia Bank have cautioned that the recent surge in oil prices has pushed the market into overbought territory, making it susceptible to a correction. They pointed to potential volatility following speeches by Saudi Aramco CEO Amin Nasser and Saudi Arabia’s energy minister on Monday.
Aramco’s CEO revised down the company’s long-term demand outlook, now forecasting global demand to reach 110 million bpd by 2030, down from the previous estimate of 125 million bpd. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman defended OPEC+ supply cuts, emphasizing the need for measured regulation in international energy markets to manage volatility. He also raised concerns about uncertainty regarding Chinese demand, European economic growth, and central bank actions to combat inflation.
