Reduced supply pushes Brent oil to $95

Oil prices continued to rise on Tuesday, driven by reduced global supply, with Brent exceeding $95 per barrel for the first time since November, but the week full of central bank decisions still pushes investors to be cautious .

Around 10:00 GMT (12:00 CET), a barrel of Brent from the North Sea, for delivery in November, rose 0.62% to 95.02 dollars, after having peaked at 95.33 dollars.

Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in October, gained 1.20% to $92.58, shortly after touching $92.95.

The reduced supply supports “prices, at least for the moment” and concerns about the extent of the supply deficit are also boosting the current increase, comments Tamas Varga, analyst at PVM Energy.

Saudi Arabia and Russia have decided to extend their voluntary production and export cuts of around 1.3 million barrels per day until the end of the year.

“Saudi Oil Minister Abdulaziz bin Salman said (Monday, during the World Oil Congress in Calgary, Canada, editor’s note) that the reduction in production was not intended to raise prices, but that it was rather a preventive measure in the face of the very uncertain development of the global economy,” reports Bjarne Schieldrop, analyst at Seb.

But the reductions now have “a significant impact on prices, which should force them to review their position over the coming months,” says Craig Erlam, analyst at Oanda.

Despite the continued rise in prices, “the conflict between a considerably reduced supply and a less than reassuring economic outlook continues,” says Mr. Varga.

Investors remain cautious, as the week promises to be rich in central bank monetary policy decisions: in the United States on Wednesday, then in Sweden, Switzerland, Norway and the United Kingdom on Thursday, and finally in Japan on Friday.

“At a time when central banks are starting to see the light at the end of the inflation tunnel, oil priced above $100 will be incredibly unwelcome,” weighing heavily on economies, recalls Mr. Erlam.

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Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.