© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018. REUTERS/Nick Oxford/File Photo
By Paul Carsten
(Reuters) – Oil prices rose on Tuesday for a fourth consecutive session as weak U.S. shale output spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.
Global oil benchmark futures were up 41 cents, or 0.43%, to $94.84 a barrel by 0751 GMT. After breaching $1 gains, U.S. West Texas Intermediate crude futures were up 92 cents, or 1.01%, to $92.40.
Prices have gained for three consecutive weeks, and both benchmarks are around 10-month highs.
U.S. oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023, the U.S. Energy Information Administration (EIA) said on Monday. It will have fallen for three months in a row.
Those estimates come after Saudi Arabia and Russia this month extended a combined supply cuts of 1.3 million bpd to the end of the year.
Prices are being supported by concerns over supply tightness and technical factors, said Kelvin Wong, a senior market analyst at biedexmarkets.com in Singapore.
“(There has been) a persistent short-term uptrend seen in the futures where prior dips had been held by its 5-day moving average since 29 August…(which is) now acting as a key short-term support at around $89.90 per barrel,” Wong noted.
“Oil’s ascent into overbought territory leaves the market vulnerable to a correction,” analysts from National Australia Bank (OTC:) wrote in a client note, pointing to volatility after speeches from Saudi Aramco (TADAWUL:) CEO Amin Nasser and Saudi Arabia’s energy minister on Monday.
The Aramco CEO lowered the company’s long-term outlook for demand, now forecasting global demand to reach 110 million bpd by 2030, down from a previous estimate of 125 million bpd.
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman on Monday defended OPEC+ cuts to oil supply, saying international energy markets need light-handed regulation to limit volatility, while also warning of uncertainty about Chinese demand, European growth and central bank action to tackle inflation.
Interest rate decisions are due this week from the central banks of the U.S., Britain, Japan, Sweden, Switzerland and Norway.
This “will do nothing to calm nerves as the clash between considerably reduced supply and less than reassuring economic outlook continues,” said PVM Energy’s Tamas Varga.