London | Reuters –– With oil investors and traders focused on an oil-price rally that has come close to US$100 a barrel, some grades of crude oil are already trading above that milestone, highlighting an expectation of tight supply.
The outright price of Nigerian crude Qua Iboe surpassed $100 a barrel on Monday, according to LSEG data (all figures US$). Malaysian crude Tapis reached $101.30 last week, said Bjarne Schieldrop, analyst at Swedish bank SEB, in a report.
Oil has risen to its highest level of 2023 as investors are focused on the prospect of a supply deficit in the fourth quarter after Saudi Arabia and Russia extended supply cuts. The two are the biggest producers in the OPEC+ group, most other members of which are also curbing output.
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“The overall situation is that Saudi Arabia and Russia are in solid control of the oil market,” Schieldrop said.
Brent oil futures, a global benchmark, traded as high as $94.89 on Monday and the related benchmark used for trading much of the world’s physical cargoes, called dated Brent BFO-, stood just above $96 according to LSEG.
Qua Iboe, and some other crudes priced against Brent, are above $100 already because they are based on the price of dated Brent plus a cash differential or premium, currently assessed by LSEG at around $4.25 a barrel.
Schieldrop said dated Brent is highly likely to move above $100 as “only noise is needed to bring it above.” Swiss bank UBS sees Brent futures reaching triple digits.
“We expect Brent to trade in a range of $90–$100 over the coming months, with a year-end target of $95,” said UBS analyst Giovanni Staunovo.
— Alex Lawler is an oil and energy sector correspondent for Reuters from London.
