Oil prices rise on supply deficit concerns

Oil pumping jacks, also known as "nodding donkeys" in an oilfield. - Andrey Rudakov/Bloomberg

OIL prices rose on Tuesday for the fourth consecutive session, as weak shale output in the United States spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.

U.S. West Texas Intermediate crude futures rose 98 cents, or 1.1%, to $92.46, by 0630 GMT, while global oil benchmark Brent crude futures rose 46 cents, or 0.49%, to $94.89 a barrel.

Prices have gained for three consecutive weeks, and are now around 10-month highs for both benchmarks.

U.S. oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023, the U.S. Energy Information Administration (EIA) said on Monday. It will have fallen for three months in a row.

Those estimates come after Saudi Arabia and Russia this month extended a combined 1.3 million barrels per day (bpd) of supply cuts to the end of the year.

Prices are being supported by concerns over supply tightness and technical factors, said Kelvin Wong, a senior market analyst at OANDA in Singapore.

"(There has been) a persistent short-term uptrend seen in the WTI crude oil futures where prior dips had been held by its 5-day moving average since 29 August...(which is) now acting as a key short-term support at around $89.90 per barrel," Wong noted.

"Oil’s ascent into overbought territory leaves the market vulnerable to a correction," analysts from National Australia Bank wrote in a client note, pointing to volatility after speeches from Saudi Aramco CEO Amin Nasser and Saudi Arabia's energy minister on Monday.

The Aramco CEO lowered the company’s long-term outlook for demand, now forecasting global demand to reach 110 million bpd by 2030, down from the last estimate of 125 million bpd.

Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman on Monday defended OPEC+ cuts to oil market supply, saying international energy markets need light-handed regulation to limit volatility, while also warning of uncertainty about Chinese demand, European growth and central bank action to tackle inflation. - Reuters