Oil futures: Crude surges 2.5%, Brent around $83/b ahead of FOMC

Quantum Commodity Intelligence – Crude oil futures Monday were climbing higher, with Brent looking increasingly secure in its latest bid to consolidate in the $80s per barrel after several failed attempts to hold the key-psychological level since mid-month.

Sep23 ICE Brent futures were trading at $82.88/b (1750 GMT), compared to the day's range of $80.42-$83.16/b and Friday's settle of $81.07/b.

At the same time Sep23 NYMEX WTI was trading $79.03/b, versus Friday's close of $77.07/b, as benchmarks hit three-month highs. 

Commerzbank said in its latest client note it believes Brent is likely to settle in the $80s, which is around $5/b above the average during both May and June.

"The supply deficit that had been looming in the second half of the year is now evidenced by hard figures," said the research note, citing Russia's seaborne oil exports falling by around 800,000 bpd from the peak earlier this year.

Oil benchmarks increased last week on supply concerns, adding to the supply/demand deficit, while also getting a helping hand from a possible China stimulus.

"We expect pretty sizable deficits in the second half with deficits of almost 2 million barrels per day in the third quarter as demand reaches an all-time high," Goldman's head of oil research Daan Struyven said. 

UAE Energy Minister Suhail al-Mazrouei told Reuters on Friday that recent measures taken by OPEC+ to balance the market are adequate for now, but the group is "only a phone call away" if any further steps are needed.

"What we are doing is sufficient. But we are constantly meeting and if there is a requirement to do anything else we will pick it up. We are always a phone call away from each other," said Mazrouei.

The economic calendar this week will likely be dominated by Wednesday's FOMC, where the Fed is expected to add another 0.25 basis points, which according to Goldman Sachs, is likely to be "the last" of its long-running tightening cycle.

Meanwhile, Morgan Stanley has lifted its forecast of US real GDP growth to 1.3% in 2023 from an earlier forecast of 0.6%, citing a strong industrial sector and more public investment in infrastructure.

In other news, a tropical disturbance swirling across the Atlantic was designated Invest 95L by the National Hurricane Center on Friday. Chances for storm development are low over the next few days and only increase to a medium chance later in the week.

A tropical depression may form as the disturbance tracks towards the Windward Islands but first needs to navigate dusty dry air and wind shear ahead.