September 18, 2023 [Reuters]- Crude oil prices above $90 a barrel in the United States stirred worries that inflation could rise further in an economy where the Federal Reserve has already hiked interest rates steeply to control rising prices.
U.S. West Texas Intermediate crude (WTI) for October delivery rose 1.9% on Thursday to settle at $90.16, the first close above $90 since Nov. 2022, as traders bet oil supplies would remain tight for the rest of the year.
Oil prices could reach $100 per barrel by the end of the year, some market participants predict. International Brent crude futures settled at $93.70 a barrel on Thursday, their highest this year.
OPEC OUTPUT CUTS
Oil supplies are tightening with top OPEC+ producers Saudi Arabia and Russia extending 1.3 million barrel per day output cuts through year-end. U.S. crude production has also flattened in recent months on a 17% drop in drilling rigs in the last 52 weeks.
Traders are bidding up near-term supplies, a factor likely to reduce U.S. oil inventories as refiners run plants at high levels to meet strong demand for gasoline and diesel.
WTI futures for October delivery traded as much as $9.15 a barrel above crude to be delivered in October 2024 . That was the highest premium since November 2022.
Higher prices in the near term prompt traders to sell oil immediately rather than store it.
“There is absolutely no incentive to store oil in a tank,” said John Kilduff, partner at New York-based hedge fund manager Again Capital.
The U.S. consumer and China’s energy demands remain a wild card for oil pricing. U.S. demand has remained strong even as fuel prices rise. China has boosted liquidity to support the country’s economic recovery.
12,600 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data