Brent continues its upward thrust amid supply tightness and Libya output concerns

The front-month ICE Brent contract has gained $1.44/bbl on the day, to trade at $92.60/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Oil prices remained supported amid growing concerns about supply tightening in the global market. These concerns have exacerbated after Saudi Arabia and Russia decided to extend production cuts through the end of 2023.

Brent futures gained more support after Libya’s state-owned National Oil Corporation (NOC) advised its affiliated oil companies to halt operations due to heavy flooding caused by Hurricane Daniel. Four of Libya’s eastern oil export terminals were closed due to the hurricane, Reuters reported.

Additionally, the Organization of the Petroleum Exporting Countries (OPEC) has projected total world oil demand to average 102.1 million b/d in 2023 and increase to average 104.3 million b/d in 2024.

“The OPEC report gave [oil] prices an extra boost,” said OANDA’s market analyst Criag Erlam.

Downward pressure:

Meanwhile, the American Petroleum Institute (API) has reported a 1.17 million bbls-rise in US crude inventories in the week ended 8 September.

Oil investors are now waiting for the US Consumer Price Index (CPI) data due later today to get fresh cues about inflationary pressures. A softer inflation data could avert an immediate hike in the interest rate by the US Federal Reserve (Fed), which in turn could drive demand for dollar-denominated commodities.

However, the current surge in Brent’s price might prompt the Fed to hike interest rates later this year, commented SPI Asset Management’s managing partner Stephen Innes.

“While the current surge might not tip the scales to a September hike, oil prices at + $90 per barrel do fit the Fed criteria that would justify another rate increase in either November or December,” he added in a note.

By Aparupa Mazumder

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