Oil prices edge higher in an uncertain market as US crude futures rise 0.1% to $78.94 a barrel, despite a 2% drop for the week, due to production cuts by major oil producers and a mixed US economy.
Oil prices rose over 1% as the dollar strengthened ahead of a speech by the head of the U.S. Federal Reserve for clues on interest rates, with Brent crude reaching $84.29 a barrel and U.S. West Texas Intermediate crude at $79.92, while a strong dollar and recent inventory draws affected demand and supply.
The price of WTI crude oil reached a new high for the year, hitting $85 per barrel, due to falling inventory levels and factors such as production cuts and a weakening dollar.
Brent crude oil is trading at around $90 a barrel and could potentially reach $100 a barrel, leading to global market disruptions and potential inflationary effects on the global economy.
Oil prices could reach triple-digit territory by next year if Russia and Saudi Arabia maintain their aggressive supply cuts, according to Goldman Sachs, with Brent crude potentially climbing to $107 a barrel by December 2024.
Goldman Sachs predicts that oil prices could reach $107 per barrel next year if OPEC+ producers maintain their production cuts, although this is not their base-case scenario.
Crude oil prices in the US increased due to a 6.3 million barrel inventory draw, following a massive decline of 10.6 million barrels the previous week, bringing inventories to the lowest in eight months.
Oil prices are climbing towards $100 per barrel due to supply disruptions in Libya and expectations of a further U.S. inventory draw.
Some grades of crude oil, including Nigerian crude Qua Iboe and Malaysian crude Tapis, are already trading above $100 a barrel, indicating expectations of tight supply, as oil prices reach their highest level in 2023 due to concerns about a supply deficit in the fourth quarter.
Goldman Sachs predicts that crude oil prices could reach $100 a barrel, posing a risk to global economic growth and complicating central bankers' efforts to control inflation, which could impact interest rate policies and further increase gasoline prices.
The Federal Reserve has left interest rates unchanged but indicated the possibility of one more rate hike, causing U.S. markets to slump and Treasury yields to rise, while European markets saw gains; Instacart shares sank, Klaviyo shares jumped, and Arm shares continued to slide; UK inflation for August was lower than expected, throwing the Bank of England's next move into question; Goldman Sachs has raised its 12-month oil price forecast to $100 per barrel.
Continental Resources CEO Doug Lawler predicts that crude prices will remain high and could reach $120 to $150 per barrel without increased production, adding that more output is necessary to prevent further price pressure.
Oil majors ExxonMobil, Chevron, and BP are near buy points as U.S. crude oil prices continue to rise above $90 per barrel.
Oil industry analysts have raised their price forecasts for 2023, with most expecting Brent Crude to average $84.09 per barrel, but few foresee sustained $100 oil due to an artificially tightened market and uncertain global economic outlook.
Escalating tensions in the Middle East, particularly the threat of a ground invasion of Gaza by Israel, have raised concerns about disruptions to oil supplies and driven up oil prices, with West Texas Intermediate crude climbing 3.6% to $85.93 a barrel and Brent crude jumping 4% to $89.41 a barrel.