As the Federal Reserve and central banks of England, China, and Japan ready for rate decisions this week, oil longs seem to have only concern: Keeping a barrel above $90 and adding to the gains thus far for September.
For a market that’s managed to avoid every correction curveball over the past three weeks — including a sizable build in crude and fuel products last week — oil longs have been emboldened not just by Saudi-Russian supply cuts but also Chinese data suggesting a recovery in the troubled No. 2 economy and top oil importer.
But as crude continues its ascent to the mid-$90s, adding 30% over the past three months, the Fed and other central banks are likely to get more queasy about inflation and that could weigh on the macroeconomic backdrop that shapes demand for oil.
Said Edward Moya, analyst at online trading platform OANDA:
«It seems like prices will easily find a home above the $90 a barrel level, which means the focus might shift to the demand outlook from the world's two largest economies.”
Following a change in its front-month position, New York-traded West Texas Intermediate, or WTI, crude was just a little higher than Friday’s settlement of $90.77, hovering at $90.84.
The U.S. crude benchmark hit $91.15 last week, its highest since November. For the week, WTI also finished last week up 3.7%, adding to prior back-to-back weekly gains of 2.3% and 7.2%.
London-traded Brent was at $94.73 versus Friday’s close of $93.93.
The global crude benchmark hit a 10-month high of $94.62 last week. Brent finished last week up 3.6%, adding to prior back-to-back weekly gains of 2.4% and 4.8%.
Crude prices have been on a tear since early June, with the rally accelerating in the past three weeks after major oil exportersRead more on investing.com