(Bloomberg) — Oil rose as a tightening market outweighed gains in the dollar and a broader risk-off tone driven by the outlook for higher interest rates.
West Texas Intermediate advanced to near $91 a barrel after ending 0.8% higher on Tuesday. The premium for near-term US barrels is near the highest in more than a year, indicating a deficit. Official data due later on Wednesday may confirm another draw in crude inventories at an important US storage site.
“Oil’s fundamentals are still strong, with no substantial bearish drivers,” said Gao Jian, an analyst at Shandong-based Qisheng Futures Co., adding that traders will be monitoring macro headwinds and risk-off sentiment in equities. “Trading remains in correction mode, with no risk yet that crude will plunge.”
Futures are set for their biggest quarterly jump since early 2022 as OPEC forecasts a shortfall of as much as 3 million barrels a day from October on the back of supply cuts by Saudi Arabia and Russia. While the rally has rekindled talk of $100-crude, the gains have stalled over the past week, and analysts including Eurasia Group have warned that the cartel and its allies may need to extend the curbs next year to keep prices from falling.
On Tuesday, the industry-funded American Petroleum Institute reported that inventories at the storage hub in Cushing, Oklahoma, declined again last week, although nationwide stockpiles climbed, according to a person familiar with the data. A separate estimate from AlphaBBL Corp. also pointed to a drop at Cushing, where holdings have already sunk to the lowest since mid-2022.
A rally in the US currency is making oil more expensive for many buyers. A gauge of the dollar has risen more than 5% since mid-July to the strongest level since early December.
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