Oil hovers near $95 a barrel as global crude surges to its highest level in 10 months
- Oil prices climbed and were hovering near $95 a barrel on Monday.
- Brent crude, the international benchmark, climbed 0.54% to $94.43. US oil prices also rose.
Tighter supply and continuous strong demand have pushed oil prices to their highest point since November.
Brent crude, the international benchmark, climbed about 0.54% on Monday to hit $94.43, while West Texas Intermediate moved 0.86% higher to $91.55.
Both benchmarks have climbed for three consecutive weeks, and are now on pace to notch their largest quarterly gain since the first quarter of 2022, when Russia invaded Ukraine.
Both Russia and Saudi Arabia earlier this month committed to extending supply cuts, and together will slash 1.3 million barrels per day through the end of the year. Meanwhile, demand remains steady, and could turn even stronger if China shakes off some of its economic malaise. The outlook in the US for the economy to remain strong and only encounter a mild recession in 2024 is also keeping demand forecasts elevated.
On Monday, Citi strategists forecasted that Brent crude could hit triple-digits this year, while Bank of America said last week that international prices would hit $100 a barrel by the end of the year, primarily on the strength of demand from Asia.
Bjarne Schieldrop, chief commodity analyst at SEB, pointed out that certain oil grades are already trading above $100 a barrel. Tapis crude, for example, traded at $101.3 a barrel last week.
"Crude oil prices have been on a relentless rise since late June when it became clear that Saudi Arabia would keep its production at 9 m b/d not just in July but also in August," Schieldrop wrote in a note Monday. "This was later extended to September and then lately to the end of the year. On paper this has placed the market into a solid deficit."
In his view, "no more than some market noise" is needed for global prices to surpass $100 a barrel.