Oil prices climbed to the highest in more than a year on Thursday on concern that the global market will be stretched for supply amid planned production cuts.
West Texas Intermediate,
the U.S. benchmark, was up 0.7% to $94.35 a barrel after briefly topping $95 for the first time since August 2022.
Brent Crude,
the international standard, also rose 0.7% to reach $97.24.
The Organization of the Petroleum Exporting Countries next meets on Oct. 4 to discuss planned reductions in output. The cuts by OPEC, plus additional voluntary cuts by Saudi Arabia and Russia, will reduce global production by 1.3 million barrels a day through the end of the year.
That will both drag on economic growth as well as push up inflation. The Federal Reserve and other central banks are promising to keep interest rates higher for longer to ensure inflation rates don’t bounce back up after their rapid decline this year.
“Concerns about tight supplies are fueling the rise in oil prices, reigniting worries about inflation and the need for interest rates to stay higher for longer,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. While demand may weaken next year, “oil prices are unlikely to retreat markedly given it’s in the interest of big producers like Saudi Arabia to keep prices in an elevated, but stable, range.”
In another sign of a tight oil market, a report showed supplies at the Cushing, Oklahoma storage hub fell to the lowest since July 2022.
Write to Brian Swint at [email protected]
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