Market News

Brent oil headed for a third weekly gain as the market continued to tighten on the back of supply curbs from Saudi Arabia and Russia.

The global crude benchmark advanced above US$94 a barrel after closing two per cent higher Thursday. The International Energy Agency and Organization of Petroleum Exporting Countries both warned this week that the market would be in deficit through year's end, helping to propel crude about four per cent higher since last Friday's close.

Demand also has held up on increasing signs the U.S. may be able to avoid a recession, while data from China on Friday beat economists' estimates in a sign the worst of the downturn is passing. The tightening market is also being reflected in surging fuel prices, with diesel at a record high on a seasonal basis in New York.

Crude in London has surged more than 30 per cent from a low in mid-June, with predictions by analysts that oil will reach US$100 a barrel becoming less rare. Still, there are technical signs that the rally is overdone. Brent's 14-day relative strength index has been above a threshold that signals a pullback is possible for much of the past two weeks.

“Crude flat price and structure continues to rip,” said Keshav Lohiya, founder of consultant Oilytics. “The crude market is now firmly in OPEC's hands as it's up to Saudi now when to start reversing some of these voluntary cuts.”

Prices:

• Brent for November settlement climbed 0.2 per cent to US$93.86 a barrel at 10:22 a.m. in London.
• WTI for October delivery rose 0.2 per cent to US$90.37 a barrel.

Widely watched timespreads continue to signal a supply shortfall. The gap between global benchmark Brent's two nearest contracts was 79 cents a barrel in bullish backwardation, the highest level since November.