Oil is heading for a fourth monthly gain with the global market tightening as investors await the OPEC+ meeting next week, watching for any changes to production strategy following booming prices.
Futures in New York are up 21% this month after closing at the highest since May 2019 on Thursday. The recovery from the Covid-19 pandemic accelerated this year after Saudi Arabia pledged deeper output cuts, helping to drain bloated stockpiles. Early indications point to differing opinions on the way forward for OPEC+, however, with the kingdom in favor of keeping supply steady and fellow heavyweight Russia angling for an increase.
The producer group will meet amid an atmosphere of buoyant optimism in the market outlook, with traders and investment banks this week making a series of bullish calls and upward price revisions.
The recent cold blast that swept across parts of the US, including Texas, has exacerbated the market tightening after halting millions of barrels of output, while prompt timespreads for both New York futures and global benchmark Brent have firmed in a bullish backwardation structure. Goldman Sachs Group Inc. is predicting Brent will move into the $70s through the next two quarters and some are even talking about $100 crude again longer term.
Brent’s prompt timespread was 77 cents a barrel in backwardation on Thursday -- where near-dated contracts are more expensive than lated-dated ones -- compared with 25 cents at the start of the month.
{{/usCountry}}Brent’s prompt timespread was 77 cents a barrel in backwardation on Thursday -- where near-dated contracts are more expensive than lated-dated ones -- compared with 25 cents at the start of the month.
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