Oil Steadies After Three-Week Rally With Tighter Markets in View

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(Bloomberg) — Oil held near a 10-month high as OPEC+ supply cuts tightened the market, with Saudi Energy Minister Prince Abdulaziz bin Salman due to address a conference on the kingdom’s crude policy and view on net zero.

Global benchmark Brent traded above $94 a barrel following a three-week run of gains that boosted prices by 11%. With Saudi Arabia and Russia prolonging supply curbs through to the year end, Prince Abdulaziz is set to be among keynote speakers at the World Petroleum Congress in Calgary later Monday.

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Crude in London is nearly 10% higher year-to-date as the OPEC+ linchpins curb production and the demand outlook brightens, with the US potentially avoiding recession just as refiners in top importer China go all-out. Against that backdrop, speculators have boosted net-bullish wagers on Brent and US oil benchmark West Texas Intermediate to a combined 15-month high.

In the physical market, refined products like diesel are increasingly showing warning signs, with the world’s refineries proving powerless to make enough of the industrial fuel. Prices have far outstripped those for crude.

Widely watched timespreads are also signaling tightness, with the gap between Brent’s two nearest contracts at 90 cents a barrel in backwardation. That’s the widest since November and reflects scarce near-term supplies.

There’s “some consolidation underway this morning in crude, awaiting fresh cues,” said Vandana Hari, founder of consultancy Vanda Insights in Singapore. Still, “growing supply tightness and eroding inventories are likely to continue underpinning bullish sentiment.”

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