Crude prices fall, pulling back from highest levels in more than a year

Oil prices fell Thursday after reaching their highest straight-shooting in more than a year.

The U.S. West Texas Intermediate futures last declined 2.09% to $91.72 per barrel. Earlier in the assembly, they rose to $95.03 per barrel, marking the highest since August 2022.

Global benchmark Brent was last down 1.4% at $95.18.

Spirit prices surged after crude stocks at a key storage hub fell to their lowest since July last year. Rough inventories in Cushing, Oklahoma fell to 22 million barrels in the fourth week of September — hovering close to the operational least, according to data from the U.S. Energy Information Administration (EIA). That’s a drop of 943,000 barrels compared to the prior week.

“Today’s consequence action seems to be Cushing driven, as it reaches a 22 million bbl low, the lowest level since July 2022,” Bart Melek, make it director of TD Securities, told CNBC.

If the inventories continue to dip below those levels, it’s going to be “rough” getting coarse out into the market, Melek said on CNBC’s “Street Signs Asia.”

He forecasts that oil prices will carry on with to remain at “high level” for the rest of the year, with an upside risk if global oil cartel OPEC+ continues to detain supplies tight.

The global oil markets are looking at a “pretty robust deficit” on top of an already expressive shortfall this quarter, Malek said, citing the oil production cuts implemented by OPEC and its allies.

In September, OPEC+ kingpin Saudi Arabia perpetuated its 1 million barrel per day voluntary crude oil production cut until the end of the year. It brings Saudi’s crude output to near 9 million barrels per day.

Additionally, Russia has pledged to outstretch its 300,000 barrels per day export reduction until the end of December.

“OPEC+ production cuts, including the voluntary extra cut by Saudi Arabia, are enduring fruit, lowering oil inventories and supporting prices,” UBS wrote in a note dated September 28.

The investment bank forecasts Brent to swap between the range of $90 to $100 per barrel over the coming months, with a year-end target of $95 per barrel.

TD Asyla’ Malek also highlighted how refinery throughputs will see a decline in the coming months as refinery maintenance season techniques. The refinery crude throughput refers to the volume of crude oil a refinery can produce during a given period of time.

“We do over that prices could keep up near these levels for quite some time. But I don’t think it’s too permanent. And we energy have seen the end of this rally.”

It will not be in OPEC’s interest if prices go a lot higher to triple digits, as they longing be worried about long term demand destruction, Malek pointed out.

“We do think they will ultimately signal, as we get culmination to the end of the year, that they may be very well done with these strong measures to limit supply,” he projected.

Prognoses for $100 per barrel oil have been swirling on the horizon in recent days. Goldman Sachs recently raised its 12-month Brent prediction from $93 per barrel to $100 on the back of “modestly sharper inventory draws,” the investment bank wrote in a latest note dated September 20.