The IEA Warns Of A Rise In Oil Prices After Four Weeks Of Gains

It was a strong week for oil after it made gains for four weeks, as signs of a tightening market have been seen in recent days, and the International Energy Agency has warned of a steep price hike in the near future.

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Following a week in which West Texas Intermediate futures traded above $82 a barrel, the WTI futures have enjoyed their longest run of gains since June. According to the International Energy Agency (IEA), on Friday, the OPEC+'s surprise production cut will result in further price increases and tighten the market more than previously expected, inflicting more pain on consumers.

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As a result of a banking crisis that has rippled through markets across the world, energy futures have returned to a 15-month low following a shortfall in mid-March. There has been a tightening in global commodity markets as the US storage hub at Cushing has seen crude stockpiles shrink and supplies from Iraqi Kurdistan have been interrupted because of the Kurdish conflict.

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According to ING Groep NV, the head of commodities strategy in Singapore, Warren Patterson, has explained that the cuts by OPEC+ have clearly boosted prices over the past few weeks. Although refinery margins are weaker than they used to be, this could be a sign of weaker demand for middle distillates, especially in the future."

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Several Asian refineries are considering cutting back on crude processing over the next year as profits are shrinking, plus there is an indication that the diesel market is weakening, which could be one of the factors contributing to slowdown concerns. There may be a limit on how much more oil prices can increase in the future because of that.