Oil continues its incredible run as it climbs another $1

<p>Citigroup hasn't quite thrown in the towel on oil yet. In August, they were <a href="https://www.forexlive.com/news/citigroup-forecasts-brent-oil-as-low-as-68-say-to-short-oil-after-summer-is-over-20230818/" target="_blank" rel="follow">saying </a>crude would fall after summer ended and could hit $68/barrel. Now they say it could hit $100 in a 'technical' move while still maintaining that the oil market is headed for oversupply.</p><p> “$90 prices look unsustainable,” said the team led by Ed Morse that has been notoriously bearish.</p><p>Today, November WTI is up $0.94 to $90.98 while the October contract, which is thinning out, is up $1.03 to $91.82.</p><p>Here's a good point from Marious Hadjikyriacos from XM "What's striking is that this relentless oil prices rally has taken place even amid concerns about lower demand from European and China as those economies grapple with a severe slowdown, which demonstrates just how tight the supply side of the equation has become."</p><p>One pushback to that is that China appears to be building inventories and that should relent in October. At the same time, Indian demand remains robust and the US economy is humming along. </p><p>Saudi Arabia certainly wants a tighter market as the latest numbers show July exports fell 11.6%. Real time numbers show a bounce but it's not enough to loosen the market.</p><p>The real question is where OPEC+ wants oil prices. Surely they see a limit somewhere because they don't want to incentivize fresh drilling in US shale or elsewhere. Is that $100? Or will they want to squeeze the market even higher? Many think there isn't material demand destruction until $120 so we may have to test that thesis.</p><p>Even at current levels, oil prices could give central banks a headache and result in a higher-for-longer scenario.</p>

This article was written by Adam Button at www.forexlive.com.