(Bloomberg) -- Oil edged higher as the effect of rapidly tightening supplies outweighed a weakening risk appetite in broader markets.
Oil settled near $91 a barrel, reversing earlier losses that were spurred by investors wrestling with the possibility of a prolonged period of higher interest rates. Traders continue to see signs of supply scarcity as the premium for near-term US oil barrels is hovering at the most expensive in over a year, indicating a market deficit.
“Crude looks well supported, with today's initial declines being short-lived as the market rebounded around the highs from earlier this month,” said Craig Erlam, senior market analyst at Oanda. “We may still see more of a correction, but there's no clear sign of sentiment turning bearish after such a strong rally over the summer.”
Oil has surged more than 25% since the end of June, heading for its biggest quarterly gain since early 2022, on the back of supply curbs from OPEC+ leaders Saudi Arabia and Russia. The rally has rekindled talk of $100-a-barrel crude, but the gains lost momentum over the past week amid concerns about the macroeconomic backdrop.
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