Oil rises to 2023 high on mounting signs of tighter supplies
BNN Bloomberg
Oil held near the highest closing level since January as slowing flows from Russia, production cuts by OPEC+ and falling US inventories pointed to a tightening market.
West Texas Intermediate climbed above US$83 a barrel, bolstered by a broader relief rally triggered by signs of moderating US inflation. Russian shipments slid below 3 million barrels a day for the first time in eight weeks, after Moscow vowed to cut production. And, in the U.S., oil inventories at the key Cushing, Oklahoma, storage hub slid for a sixth week to hover near the lowest since January.
The oil market’s structure is also signaling strength as WTI’s prompt spread — the difference between its two nearest contracts — is trading at 9 cents in backwardation, which would be the highest this year on a closing basis. WTI’s move into a backwardation and the pace of the changes across the futures curve recently are bullish signals for algorithm-driven traders to take up long positions, said Ilia Bouchouev, a former trader and an adjunct professor at New York University.
The combination of algo traders piling in and declining inventories sets the stage for stronger prices heading into the summer, he added.
