NEW YORK: Oil prices gained almost 1% to a nine-month high on Friday on rising US diesel futures and worries about tight oil supplies after Saudi Arabia and Russia extended supply cuts this week.
Brent futures rose 73 cents, or 0.8%, to settle at $90.65 a barrel, while US West Texas Intermediate (WTI) crude rose 64 cents, or 0.7%, to settle at $87.51.
Both crude benchmarks remained in technically overbought territory for a sixth straight day, with Brent on track for its highest close since Nov. 16. WTI’s close was its highest since Sept. 6, when it settled at its highest since November.
For the week, both benchmarks were up about 2%, following gains last week of about 5% for Brent and about 7% for WTI.
“Crude prices continue to trade on supply-side drivers. No one is doubting that OPEC+ will keep this market tight going into the winter,” Edward Moya, senior market analyst at data and analytics firm OANDA, said in a note.
The Organization of the Petroleum Exporting Countries (OPEC) and their allies like Russia are collectively known as OPEC+.
This week, OPEC member Saudi Arabia and Russia extended their voluntary supply cuts of a combined 1.3 million barrels per day to the end of the year.
Saudi Arabia will probably find it difficult to end its cuts at the end of the year without triggering a price slide, Commerzbank analysts said in a note.
In the US, energy firms this week added one oil rig, the first weekly increase since June, according to energy services firm Baker Hughes.
Rising US diesel prices also supported crude prices with heating oil futures up about 3%.
Energy traders noted seasonal refinery maintenance in Russia in September will likely reduce diesel exports but could lead to an increase in oil exports.
Separately, Venezuelan President Nicolas Maduro arrived in China on Friday for his first visit in five years. China is the world’s largest oil importer and Venezuela, an OPEC member, has the world’s largest proven crude reserves.
The oil market is still concerned about the demand outlook in China, which has had a sluggish post-pandemic recovery and stimulus pledges have fallen short of expectations.
China has been deluged by heaviest rain since records began 140 years ago in Hong Kong, killing two people and injuring more than 140, state media reported.
Data on Thursday showed overall Chinese exports and imports fell in August, as sagging overseas demand and weak consumer spending squeezed businesses.
In Germany, the lower house of parliament passed a bill that could reduce future fossil fuel demand by phasing out oil and natural gas heating systems.
Oil traders are also watching whether central banks in the US and Europe will keep fighting inflation with interest rate hikes.
“Riyadh (Saudi Arabia) is acutely aware of the tightrope it walks between tightening the market and upsetting any up-and-until-now progress achieved by central banks in taming price-rise driven inflation,” said John Evans of oil broker PVM. Interest rate hikes can slow economic growth and reduce oil demand.
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