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(Bloomberg) — Oil’s march toward $100 a barrel remained on pause as the impact of a rapidly tightening market was offset by gains in the dollar that made crude more expensive for many buyers. 

West Texas Intermediate was steady near $90 a barrel after slipping 0.4% on Monday. Surges in closely watched timespreads and hefty premiums for some physical crude cargoes highlighted growing scarcity in the market. But these were tempered by the dollar, which is near its strongest this year, and the likelihood that US interest rates will stay higher for longer. 

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Oil has surged 27% since end-June on the back of supply curbs from OPEC+ leaders Saudi Arabia and Russia, and is set for its biggest quarterly gain since early 2022. That’s rekindled talk of $100-a-barrel crude but the gains have lost momentum over the past week amid concerns over the macro backdrop.

“The breathless rally of recent weeks has run out of steam after factoring in the major bullish indicators,” said Vandana Hari, founder of consultancy Vanda Insights. “But at the same time, there are no compelling factors to exert significant downward pressure.”

Oil’s forward curve is pointing to a growing supply deficit. WTI’s prompt timespread is now $1.55 a barrel in backwardation, a bullish pattern, more than double the level on Sept. 15. 

A further drop in US crude stockpiles could help push oil prices higher. The industry-funded American Petroleum Institute will report figures on Tuesday, followed by official data from the Energy Information Administration a day later. There’s a risk that inventories at the key hub in Cushing, Oklahoma will drop to the lowest level in almost a decade. 

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