(Bloomberg) -- Oil settled at nine-month highs as investors digested a decision by OPEC+ leaders Saudi Arabia and Russia to extend supply curbs through the end of the year.
The strategy from Riyadh and Moscow aims to drain inventories further and was felt across the entire oil market complex. West Texas Intermediate's December-December timespread, a favored trade of oil hedge funds, strengthened to the widest since late 2022.
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The global benchmark, Brent, settled above $90 on Thursday, the highest since November. Adding to bullish sentiment, Saudi Arabia lifted official selling prices for its flagship Arab Light crude to Asia to a 10-month high, a signal of its confidence in demand.
Still, crude is flashing warnings that it is overbought on a 14-day Relative Strength Index basis, raising the risk of a pullback.
Oil has rallied sharply this quarter after the Organization of Petroleum Exporting Countries and its allies adopted group-wide supply cuts that were then supplemented by additional, voluntary reductions. The production restraints have been implemented just as the International Energy Agency estimates that global crude consumption is running at a record pace.
“It was absolutely a surprise,” said Nadia Martin Wiggen, a director at commodities-focused hedge fund Svelland Capital. “When we look toward the start of next year after these cuts, we're going to see OECD commercial stock levels at lows we haven't seen except in very big years.”
Goldman Sachs Group Inc. said that the moves by OPEC+ brought bullish risks to its outlook for prices, according to a report. The bank's analysts outlined several scenarios, including one that saw Brent extending gains to above $100 a barrel, though they stressed that this wasn't a base-case view.
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