The market still is likely to be in a deficit of 1.5 million barrels a day over the next six months, according to Citigroup Inc., a figure that could grow even larger should soaring natural-gas prices spur a shift to petroleum fuels.
A tighter market is offsetting economic concerns, stoked by a contraction in China’s factory activity in September. Crude is heading for a monthly gain, helped by supply disruptions in the Gulf of Mexico and robust demand. The global energy squeeze likely will feature in OPEC+ talks when the group meets Monday to discuss production policy, with some options traders betting prices could reach $200.
“Until the gas, coal and power market finds a plateau or corrects lower, crude oil is likely to remain supported given the increased demand coming from substitution,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S.
Global oil supply is expected to fall short of demand by 1.2 million barrels a day in October, and by 900,000 barrels a day the following month, according to an OPEC secretariat document being reviewed by the group’s Joint Technical Committee. If OPEC+ sticks to its agreed increase of 400,000 barrels a day in November, it’s unlikely to be enough to address growth in consumption, Vivek Dhar, an analyst at Commonwealth Bank of Australia, said in a note.
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