Oil prices rise to 10-month peaks supported by fears of tight supply

Tuesday, September 19, 2023 - 16:27
Point Trader Group

Oil prices rose more than 1 percent on Tuesday, reaching a 10-month high after weak shale oil production in the United States raised further concerns about tight supply caused by extended production cuts from Saudi Arabia and Russia.

By 1514 GMT, Brent crude futures rose $1.13, or 1.2 percent, to $95.56 per barrel. It reached $95.96 a barrel during the session, the highest level since November.

US West Texas Intermediate crude futures also rose $1.48, or 1.6 percent, to $92.96 per barrel. It had reached $93.74 a barrel earlier in the session, also the highest level since November.

Prices are on track to rise for the fourth week in a row.

“The market is starting to realize that there are concerns everywhere about supply shortages, whether it is crude oil, diesel or gasoline... We are facing a fait accompli,” said Phil Flynn, an analyst at Price Futures Group.

The US Energy Information Administration said on Monday that US oil production, one of the largest shale oil producing regions, is set to decline to 9.393 million barrels per day in October, the lowest level since May 2023. This will be the third monthly decline in a row.

These estimates come after Saudi Arabia and Russia this month extended their combined production cuts of 1.3 million barrels per day until the end of the year.

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