NEW YORK/LONDON (dpa-AFX) – The upward trend in oil prices continues. Crude oil prices continue to rise and are approaching the $100 mark. On Tuesday, a barrel (159 liters) of North Sea Brent for delivery in November cost $95.22. That was 75 cents more than the previous day. A barrel of West Texas Intermediate (WTI) for October delivery rose $1.09 to $92.50.
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At its peak, the Brent price rose to $95.96 and the WTI price to $93.74. These were the highest levels since November. Oil prices have been rising sharply since the beginning of July. Since then they have increased by around $20.
The main reason for the ongoing price increase is the tight supply from larger producing countries such as Saudi Arabia and Russia. The two countries lead the OPEC+ oil network. Some countries in this group are following this line, but Saudi Arabia and Russia are responsible for the lion’s share of the cuts. Most recently, the restrictions were extended until the end of the year, which has pushed prices further up.
The Commerzbank experts also point to the recent decline in US shale oil production. “The lull in shale oil production is not surprising given the significant decline in drilling activity between December and the end of August, but is nonetheless concerning,” it said in a commentary. “After all, the USA is currently even more important as the main driver of production growth outside OPEC because OPEC+ is keeping its supply tight.”
On the demand side, there are indications that the economic situation in China is at least stabilizing. Recently, some economic data was slightly better. The government and the central bank have taken numerous measures to help the weakening economy. It is also positive that the recession expected by many experts has not yet materialized in the USA. The bottom line is that tight supply meets robust demand – a typical environment for price increases./jsl/jha/