Oil futures: Prices higher on Q4 tightness, Brent around $94.50/b

Quantum Commodity Intelligence – Crude oil futures Monday maintained the month's firm momentum, as concerns over tightening markets in the fourth quarter kept prices hovering at around yearly highs.

Front-month Nov23 ICE Brent futures were trading at $94.34/b (1845 GMT), compared to the day's 10-month high of $94.95/b and Friday's settle of $93.93/b.

At the same time Nov23 NYMEX WTI was trading $90.58/b, versus Friday's settle of $90.02/b, while the less-liquid Oct23 contract was trading $91.52/b heading into this week's expiry.

Markets were again buoyed by last week's run of upbeat reports from OPEC, the IEA and EIA, particularly the outlook from OPEC. The producer group now expects a deficit of over 3 million bpd in the fourth quarter.

"The OPEC September report highlighted this with a three million barrel per day deficit driving prices up to their highest level in 10 months. And the rally is showing few signs of cooling. Unless the economic data deteriorates, we may be talking about $100 oil before long," said Craig Erlam, analyst at brokerage Oanda.

Speculators hiked bullish crude positions again last week with net long positions up 10% to a five-month high 246.6k contracts, representing over 246 million barrels of Brent crude. But traders were again most bullish on US crude, hiking net long WTI positions 13% to an 18-month high 264k contracts. 

Oil markets were also given a lift after government data revealed Chinese refiners processed a record 15.23 million bpd amount of crude oil in August, amid a rise in both domestic demand and exports.

Meanwhile, banks JP Morgan and ANZ have nudged up GDP forecasts for this year, albeit by just 20 basis points to 5% and 5.1%, respectively, but still below target.

This week will see the FOMC rate decision on Wednesday, as US Federal Reserve officials meet for the first time since last month's jump in inflation after the CPI bounced 0.6% in August - the biggest monthly gain since June 2022 as energy prices surged.

However, economists expect the Fed to hold rates at the current Fed Funds target range (5.25%-5.50%) but are likely to flag potential rises in future.

Also this week, the Bank of England, the Swiss National Bank and the Bank of Japan will meet on rate policy.