Oil extended gains Thursday to a fresh one-year high and towards the $100-a-barrel mark on concerns about growing demand and waning supplies, while bets on another US interest rate hike kept the dollar elevated and equities mixed. News that troubled Chinese developer Evergrande suspended trading in its Hong Kong-listed shares added to the uncertainty, following a tepid lead from Wall Street where speculation about more Federal Reserve policy tightening has winded investors.
The risk-off mood on trading floors summed up the generally gloomy sentiment seen through most of September, which saw central banks around the world either hike rates again or warn of more to come owing to stubborn inflation. One of the main drivers of that is a surge in crude prices, which has been fuelled by thinning supplies after Saudi Arabia and Russia said they would cut output until the end of the year and a pick-up in demand in key consumer nations including the United States and China.
News that stockpiles at the key US storage facility in Cushing, Oklahoma, had hit their lowest since July last year — and operational minimums — sparked a strong rally Wednesday, with WTI soaring more than three percent to its highest since August 2022. Brent pushed further above $97 to a new 10-month peak. “My fear in this market is we have de-stocked so much inventory,” said Amrita Sen, of consultant Energy Aspects. “Right now, what’s going on in the US — Cushing is dry,” she told Bloomberg TV.
Tim Waterer, chief market analyst at KCM Trade, added: “While a longer period of high global interest rates could be problematic for oil demand in the future, supply side traits could favour continued upside risks for the price in the short-term.”