Oil prices continued to increase on Tuesday for the fourth consecutive session as concerns about a supply deficit and weak shale output in the United States persist. The extended production cuts by Saudi Arabia and Russia have intensified worries about limited oil supply.
The U.S. West Texas Intermediate (WTI) crude futures rose by 1% to $92.38, just below the previous day’s 10-month high. Meanwhile, the global oil benchmark, Brent crude futures, increased by 0.3% to $94.70 per barrel. This price surge marks the third consecutive week of gains in oil prices.
The U.S. Energy Information Administration (EIA) reported that oil output from major shale-producing regions in the U.S. is expected to decline to 9.393 million barrels per day (bpd) in October, reaching the lowest level since May 2023. This decrease indicates a downward trend for the third consecutive month.
These projections coincide with the decision made by Saudi Arabia and Russia to extend their combined supply cuts of 1.3 million bpd until the end of the year. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman defended these cuts, highlighting that regulated markets are necessary to control volatility. However, he also expressed caution regarding uncertainties surrounding Chinese demand, European growth, and central bank actions to combat inflation.
In summary, oil prices continue to rise due to concerns about a supply deficit caused by extended production cuts and the decreasing output from major shale-producing regions in the United States. These factors have created uncertainty in the energy market, with Saudi Arabia stressing the importance of regulated markets to maintain stability.
Source: Reuters, Stephanie Kelly, Thomson Reuters