Oil prices rose nearly 1 percent to a nine-month high on Friday, boosted by rising U.S. diesel futures and concerns about oil supply shortages after Saudi Arabia and Russia extended supply cuts this week.
Brent futures rose 73 cents, or 0.8%, to settle at $90.65 a barrel, while West Texas Intermediate (WTI) crude gained 64 cents, or 0.7%, to settle at $87.51.
Both crude oil benchmarks remained in technically overbought territory for the sixth day in a row; Brent’s close was its highest level since November 16. WTI’s settlement was its highest since Sept. 6, which was its highest since November.
Following gains of nearly 5% for Brent and nearly 7% for WTI last week, both benchmarks were up about 2% for the week.
Investors have no doubt that OPEC+ will keep this market tight throughout the winter. Crude prices continue to trade with supply-side factors.
This week, OPEC+ members Saudi Arabia and Russia extended voluntary supply cuts totaling 1.3 million barrels per day through the end of the year, but they will likely have a hard time ending the cuts at the end of the year without triggering a price collapse.
U.S. energy firms added an oil rig this week, according to Baker Hughes; This was the first weekly increase since June.
Rising U.S. diesel prices also supported crude oil prices, with heating oil futures rising nearly 3%.
Seasonal refinery maintenance in Russia in September will likely reduce diesel exports but could lead to an increase in oil exports, energy traders said.
Separately, President Nicolas Maduro of Venezuela, a member of OPEC and having the world’s largest proven crude oil reserves, came to China, the world’s largest oil importer, on Friday for his first visit in five years.
The oil market is still concerned about the demand outlook in China, where the post-pandemic recovery has slowed and stimulus promises have fallen short of expectations.
Meanwhile, China suffered the heaviest rainfall since records began 140 years ago in Hong Kong; Two people were killed and more than 140 were injured.
Data released on Thursday showed China’s overall exports and imports fell in August as lower overseas demand and weak consumer spending weighed on businesses.
Germany’s lower house of parliament has passed a bill that could reduce future fossil fuel demand by phasing out oil and gas heating systems.
Oil traders are also watching whether central banks in the US and Europe will continue to fight inflation with interest rate hikes.
There are concerns in the market about Saudi Arabia tightening the market and keeping in check the progress central banks have made so far in reducing inflation caused by price rises. Increases in interest rates could slow economic growth and reduce oil demand.