Oil prices reached a one-year high in Asian trading hours following a significant drop in crude stocks at a key storage hub in Cushing, Oklahoma. The inventories fell to 22 million barrels in the fourth week of September, the lowest level since July 2022. The decrease in stock levels has raised concerns about the ability to supply crude to the market if inventories continue to dip below this threshold. As a result, oil prices are expected to remain at high levels for the rest of the year, with the potential for further increases if OPEC+ continues to restrict supplies.
The global oil market is facing a “pretty robust deficit” due to the production cuts implemented by OPEC and its allies. Saudi Arabia extended its voluntary crude oil production cut of 1 million barrels per day until the end of the year, while Russia pledged to extend its export reduction of 300,000 barrels per day until December. Refinery throughputs are also expected to decline in the coming months as refinery maintenance season approaches. Despite the current rally in oil prices, some experts believe that it may not be sustainable in the long term, and OPEC may eventually signal the end of its measures to limit supply.
There have been forecasts of oil prices reaching $100 per barrel, with Goldman Sachs recently raising its 12-month Brent forecast to $100. The investment bank cited “modestly sharper inventory draws” as the reason for the upward revision. However, concerns about long-term demand destruction may prevent oil prices from reaching triple digits. Overall, it is expected that OPEC will be able to sustain Brent in a range of $80 to $105 in 2024, supported by strong demand growth in the Asia region.