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West Texas Intermediate (WTI) soared past $90 in Thursday morning trading, up over 30% in three months, driven by sustained OPEC+ production cuts and indications that a tighter market is coming.
At 10:51 a.m. ET on Wednesday, WTI was trading at $90.14, up $1.62 on the day for a gain of 1.83%.
WTI’s flirtation with the $90 mark comes a day after the International Energy Agency (IEA) warned that Saudi-led OPEC+ production cuts would create a “significant supply shortfall” that would send oil prices surging amid high volatility.
More specifically, the IEA said that from this month on, OPEC+ production cuts would “drive a significant supply shortfall through the fourth quarter”.
The IEA’s forecast follows last week’s extension of production and export cuts of 1 million barrels per day by Saudi Arabia, in addition to 300,000 bpd from Russia. The cuts were extended through December this year “with the aim of supporting the stability and balance of oil markets”.
OPEC also released its monthly report this week, indicating that fourth-quarter supplies could be tighter than previously thought.
The emerging tight supply situation has also pushed Brent crude prices to over $93 per barrel. At 10:52 a.m. ET on Wednesday, Brent was trading at $93.59, up $1.71 on the day for a 1.86% gain.
Amid mounting predictions of $100 oil in the final quarter of this year, Standard Chartered said in a report earlier this week that sharp falls in inventories caused by excess demand will continue for the remainder of the year, pushing prices higher.
Last week, Goldman Sachs said oil prices could hit $107 next year if OPEC+ failed to reverse course on production cuts.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com