Oil trades near highest close in five months as market tightens

Oil held near the highest close in five months on signs of a tighter global market as traders waited for a monthly outlook from OPEC.

West Texas Intermediate traded above $83 a barrel after advancing by 4.4 per cent over the prior two days.

The gains were driven by another drop in crude inventories at the key Cushing, Oklahoma, storage hub, signs of weaker Russian oil exports, and interruptions to pipeline supplies from Iraqi Kurdistan.

The Organization of Petroleum Exporting Countries will release its monthly snapshot later Thursday.

The analysis could offer fresh insight into expected market balances over the rest of 2023 after the OPEC members and its allies including Russia announced a surprise production cut earlier this month.

Crude has rebounded strongly since hitting a 15-month low in March, with widely watched timespreads pointing to a tightening of conditions.

On Wednesday, Fatih Birol, the International Energy Agency’s executive director, said that demand is likely to outstrip supply in the second half.

Oil’s resurgence has also been supported by signs that US inflation is moderating, potentially enabling the Federal Reserve to pause its rate-hike campaign.

Read: Saudi Arabia’s 2022 GDP grows 8.7 per cent, boosted by higher oil prices