Brent above $97/bbl, WTI up 1% amid supply concerns

The recent output cuts by Opec+ countries and the decline in US stocks will likely keep oil prices elevated.

Livemint
Updated28 Sep 2023, 11:44 AM IST
Crude stocks at the Cushing, Oklahoma, storage hub, delivery point for US crude futures, fell by 943,000 barrels in the week to just under 22 million barrels, the lowest since July 2022, data showed. (Photo: Reuters)
Crude stocks at the Cushing, Oklahoma, storage hub, delivery point for US crude futures, fell by 943,000 barrels in the week to just under 22 million barrels, the lowest since July 2022, data showed. (Photo: Reuters)

New Delhi: Global oil prices surged on Thursday as a slump in crude stocks in the US exacerbated concerns over tight global supplies amid OPEC output cuts led by Saudi Arabia.

At 1113 am, the November Brent contract on the Intercontinental Exchange traded at $97.34 per barrel, up 0.82% from its previous close. West Texas Intermediate (WTI) futures on NYMEX traded at $94.59 per barrel, a rise of 0.97% from previous close.

Ravindra V. Rao, head of commodity research, Kotak Securities Ltd., noted that the rise in WTI crude futures has come in the backdrop of decline in stocks at the Cushing storage hub to critical levels.

“Stockpiles at Cushing, Oklahoma, the delivery point for WTI futures, tumbled below 22 million barrels last week, the lowest since July 2022, threatening their ability to operate normally and sending prices for near-term supplies surging. US commercial crude stocks also tumbled, providing evidence of tightening due to supply cuts from Saudi Arabia and Russia,” he said.

Rao added that WTI futures are hovering above $94 a barrel, amid signs of tightening supply and better demand prospects from China and the US.

Crude inventories in Cushing, Oklahoma fell to 22 million barrels in the fourth week of September, according to data from the U.S. Energy Information Administration (EIA), declining by 943,000 barrels compared to the previous week.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd., said that oil prices jumped around 3% on Wednesday after official data showed that US crude stocks fell more than expected, adding to worries of supply tightness amid production cuts by the OPEC+.

“Despite strong gains in the dollar index and the U.S. bond yields, crude oil prices surged in the international markets,” Kalantri said.

The fall in stocks follow production cuts totalling 1.3 million barrels a day to the end of the year announced by Saudi Arabia and Russia of the Organization of the Petroleum Exporting Countries and allies (Opec+). The group will is scheduled to meet on 4 October to review markets.

The recent output cuts by Opec+ countries and the decline in US stocks will likely keep prices elevated.

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First Published:28 Sep 2023, 11:44 AM IST
HomeMarketsCommoditiesBrent above $97/bbl, WTI up 1% amid supply concerns

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