Oil Heads for Fourth Weekly Gain as IEA Sees Higher Price Threat

Oil headed for a fourth straight week of gains, supported by signs of a tightening global market that have the International Energy Agency warning of higher prices ahead.

(Bloomberg) — Oil headed for a fourth straight week of gains, supported by signs of a tightening global market that have the International Energy Agency warning of higher prices ahead.

West Texas Intermediate traded above $82 a barrel and is set to post its longest run of weekly advances since June. Crude is hovering near five-month highs after OPEC+ surprised the market with plans to cut more than 1 million barrels of daily output. Declining US stockpiles, weaker flows from Russia and interruptions to pipeline supplies from Iraqi Kurdistan have added to the gains.

Markets are digesting a week of mixed projections for crude supply and demand. The latest OPEC+ cuts threaten to boost oil prices for consumers already facing high inflation, the IEA said in its monthly outlook on Friday. The cartel had forecast markets being deeply undersupplied a day earlier. In contrast, the US Energy Information Administration projected supplies surpassing demand both in 2023 and 2024. 

Demand from the world’s largest crude importer is supporting prices as well. Recent data show that China imported the most oil in three years last month, underpinned by record Russian flows. On Friday, People’s Bank of China Governor Yi Gang said the nation’s economy is expected to grow about 5% this year.

Key technical measures are signaling a tighter market, too. WTI’s prompt spread — the difference between its two nearest contracts —  was at 14 cents a barrel in backwardation. The bullish pattern is a stark reversal from when it was trading 16 cents in contango a month ago. 

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