Crude gains for fourth straight day on supply concerns

Oil prices rose for a fourth consecutive session on Tuesday as weak US shale output spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.

Global oil benchmark Brent crude futures were up 50c, or 0.53%, to $94.93 a barrel by 11.16am GMT. West Texas Intermediate was 94c, or 1.03%, higher at $92.42 after breaching $1 gains.

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

US oil output from top shale-producing regions is on track to fall to 9.393-million barrels a day in October, the lowest since May 2023, the US Energy Information Administration (EIA) said on Monday. That would be the third straight month of declines.

The estimates come after Saudi Arabia and Russia this month extended a combined supply cuts of 1.3-million bbl/day to the end of the year.

Prices are being supported by concerns about 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 a barrel,” Wong said.

“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, and now forecasts global demand to reach 110-million bbl/day by 2030, down from a previous estimate of 125-million bbl/day.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman on Monday defended Opec+ cuts, 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.

Interest rate decisions are due this week from the central banks of the US, Britain, Japan, Sweden, Switzerland and Norway.

This “will do nothing to calm nerves as the clash between considerably reduced supply and less than reassuring economic outlook continues,” said PVM Energy’s Tamas Varga.