Oil prices are on the rise once again, extending last week’s gains and hitting new highs in early Asian trade. The price of WTI crude broke above $91.60 per barrel, while Brent crude was trading at $94.74.
There are several factors driving the increase in oil prices. Falling crude inventories, along with the continuation of OPEC+ production cuts, have created a tighter market and sparked a rally in oil prices. China’s latest stimulus measures have also contributed to the bullish sentiment, with hopes that the Asian giant’s economy is set to rebound.
Global inventories have been decreasing as the market tightens, thanks to production cuts from OPEC+ and Saudi Arabia. This tightening supply-demand balance has lifted oil prices over the past few weeks. China’s industrial output report for August, which showed faster-than-expected growth, further boosted market confidence. Moreover, the Chinese government’s decision to cut the reserve ratio for banks has increased liquidity in the system and made market participants more optimistic about the future of oil prices.
Experts and analysts are bullish on the oil market, citing China’s stimulus policy, strong US economic data, and OPEC+’s continued output cuts as factors supporting the upward movement of oil prices. However, some believe that the market might need a fresh catalyst to push oil prices to triple digits.
Portfolio managers have also been increasing their bullish bets on crude oil, responding to the extension of supply cuts from Saudi Arabia and Russia. The combined net long positions in Brent and WTI reached an 18-month high, with most buying led by the US crude oil benchmark. This indicates growing investor confidence in the future strength of oil prices.
Overall, the tightening market conditions and various supportive factors have contributed to the ongoing rally in oil prices, which are expected to stay elevated for the time being.
Sources:
– OilPrice.com