LONDON: With oil investors and traders focused on rising oil prices approaching $100 per barrel, some types of crude oil are already trading above that level, highlighting expectations of tight supply.
The direct price of Nigerian KwaEboe crude exceeded $100 per barrel on Monday, according to data from the London Stock Exchange. Bjarne Schildrup, an analyst at the Swedish bank SEB, said in a report that the price of Malaysian Tapis crude oil reached $101.30 last week.
Oil rose to its highest levels in 2023 as investors focused on the possibility of a supply shortfall in the fourth quarter after Saudi Arabia and Russia extended supply cuts. The two countries are the largest producers in the OPEC+ group, most of whose other members are also cutting production.
“The general situation is that Saudi Arabia and Russia strongly control the oil market,” Schildrup said.
Brent crude futures, a global benchmark, traded at a high of $94.89 on Monday, and the related benchmark used to trade much of the world’s physical shipments, called dated Brent, was just above $96, according to LSEG.
Qua Iboe, and some other crude oils priced against Brent, are already above $100 because they are based on the dated Brent price plus a cash spread or premium, which LSEG currently values at around $4.25 per barrel.
Dated Brent crude is very likely to move above $100 because “it only takes noise to get it above,” Schildrup said. Swiss bank UBS expects Brent crude futures to reach triple digits.
“We expect Brent to trade in the $90-100 range over the coming months, with a year-end target of $95,” UBS analyst Giovanni Stanovo said.
