Oil prices rise for seventh straight week

IC Markets

Oil prices hit their longest winning streak since mid-2022, with reports forecasting higher demand, providing fresh impetus to a rally based on rising risks of supply disruptions and an extension of Saudi output cuts.

Among the bullish forecasts was a monthly report from the International Energy Agency on Friday, which said world oil demand surged to record levels in June and could surge further in August on the back of strong consumption in China. OPEC's monthly report on Thursday predicted the market would be in a critical deficit of more than 2 million bpd this quarter.

Meanwhile, supply concerns that have driven oil prices higher since late June have yet to abate. Traders are closely watching possible disruptions to Russian exports in the Black Sea following the recent escalation of the war with Ukraine. On Tuesday, OPEC leader Saudi Arabia reiterated its pledge to voluntarily curb supply next month.

West Texas Intermediate crude rose above $83, consolidating its longest seven-week winning streak since June 2022. On Thursday, futures prices hit their highest intraday level since November.

Oil prices have rallied since late June as Saudi Arabia cut production, driven by OPEC+ ally Russia curbing exports. Traders also continued to focus on the broader economic outlook as fallout from the Federal Reserve's aggressive rate-hike cycle continued to ripple through markets, but JPMorgan said on Friday that prices could reach $90 by September.

"We believe oil prices will continue to climb to $90," analysts including Natasha Kaneva wrote in a note, referring to the Brent crude benchmark. "Major market indicators suggest that physical markets are tightening rapidly."

Raw Trading Ltd

Iran has moved four U.S. citizens from prison to house arrest as the first step in a pending deal between Washington and Tehran. The deal could eventually lead to more oil from OPEC producers hitting the market. On Friday, however, national security spokesman John Kirby said the two countries were not actively negotiating a nuclear program.

The tension is spreading to downstream fuel markets, with prices for European refinery residues surpassing crude prices for the first time in decades. Gasoline and diesel prices are also well above seasonal norms, partly because of constraints on refinery output.