Oil prices gain on prospect of tighter supply

Oil prices rose almost 1% on Tuesday, boosted by a tighter supply outlook, while investors awaited macroeconomic data that could indicate whether interest rates will rise further in the US and Europe.

November Brent crude futures rose 67c, or 0.7%, to $91.31 a barrel, while West Texas Intermediate futures for October firmed by 76c, or 0.9%, to $88.05.

Brent breached $90 a barrel last week for the first time in 10 months after Saudi Arabia and Russia announced they would extend voluntary supply cuts of a combined 1.3-million barrels per day until the end of the year.

“There is little doubt that the oil industry feels a collective rally risk with a perception of and actual tightening in parts of oil flow,” PVM Oil analyst John Evans said.

Opec will release its monthly oil market report later in the day after one by the International Energy Agency on Wednesday. Both reports include widely used forecasts on the outlook of oil market supply and demand fundamentals.

In Libya, a deadly storm led the Opec member to shut four of its eastern oil export terminals on Saturday.

August US consumer price index data, due for release on Wednesday, is expected to give some hints on the direction of interest rates from the world’s biggest oil consumer.

The Federal Reserve is widely expected to leave interest rates unchanged at a policy meeting next week, though views are split on whether the Fed will hike or pause again in November.

The European Central Bank will announce its interest rate decision on Thursday. The European Commission on Monday forecast the eurozone to grow more slowly than previously expected in 2023 and 2024.

Investors also awaited industry data on US crude stocks due at 20.30pm GMT. Crude inventories were expected to have fallen by about 2-million barrels in the week to September 8, according to a preliminary Reuters poll on Monday.

Reuters