Oil futures: Brent nears $96/b before late selloff

19 Sep 2023

Quantum Commodity Intelligence – Crude oil futures Tuesday posted fresh 10-month highs with Brent surging above $95/b for the first time since last November, although slipped back during a late selloff as traders booked in profits. 

Front-month Nov23 ICE Brent futures were trading at $94.61/b (1950 GMT), having registered a high of $95.96/b and compared to Monday's settle of $94.43/b.

At the same time Nov23 NYMEX WTI was trading $90.77/b, versus Monday's settle of $90.58/b, while the less-liquid Oct23 contract was trading $91.59/b heading into the expiry.

Prices have now rallied by nearly a third since late June and around 10% this month alone after Saudi Arabia announced it would extend the additional 1 million bpd voluntary cut until the end of the year, while OPEC last week flagged a supply deficit of more than 3 million bpd in the fourth quarter.

"Fundamentals are very, very strong right now," Amrita Sen, co-founder of Energy Aspects told Bloomberg TV. "At this point it's a short-term thing. I'm not saying it's going to average above $100, but could it go to $100 for a bit? Absolutely yes."

Brent spreads also continued to soar in a further sign of market tightness as the Nov23/Dec23 moved above $1.25/b, doubling in little over a week, while the Dec23/Dec24 spread was pushing towards $10/b.

In comments Monday, Saudi energy minister Prince Abdulaziz bin Salman defended the OPEC+ cuts, saying the group is not aiming for price control via the output reductions but to lower market volatility.

He gave no sign the group would review policy and pump more oil anytime soon, only saying output plans will be reviewed monthly and wait until they see "real numbers" before making further decisions.

Abdulaziz also said uncertainty over weak European growth and global measures to manage inflation were contributing to the uncertain oil outlook, adding that "the jury is still out" with regards to the pace of China's economic recovery.  

Meanwhile, even the usually bearish Citibank has lifted its forecast for the balance of the year after the OPEC+ cuts, saying geopolitical risks may push prices over $100 for a short period, but added that additional non-OPEC+ supplies mean that "$90 prices look unsustainable".