Oil Rises Almost 30% For The Quarter, But Analysts Say The Commodity Is Overbought

Meanwhile, experts disagree on where prices will head in the near term: File Image/Pixabay.

Oil trading may be rudderless as investors alternate between fretting about demand and tight supply, but although the former concern caused crude prices to settle 1 percent lower on Friday, the latter concern resulted in prices rising almost 30 percent overall in the third quarter.

Brent for November settled down 7 cents to $95.31 per barrel, up about 2.2 percent in the week and 27 percent in the third quarter; the December contract for Brent settled down 90 cents to $92.20 per barrel.

West Texas Intermediate settled down 92 cents to $90.97 per barrel, up 1 percent in the week and 29 percent in the quarter.

John Kilduff, founding partner at Again Capital, said,  "WTI has been the belle of the ball, but today it's losing its luster" and explained that profit taking along with economic concerns drove Friday's trading; specifically, investors are nervous about the prospect of a partial U.S. government shutdown on Sunday, which a White House economic advisor warned was an "unnecessary risk" to a resilient U.S. economy (although many hold that the "risk" would affect not the economy in general but government agencies).

Also informing oil trading was Baker Hughes reporting that the U.S. oil and gas rig count fell by seven to 623 in the week to Sept. 29, the lowest since February 2022.

Additionally, data released on Friday showed that Russia will have almost no diesel exports next month as Moscow tries to reduce domestic prices; the news caused European diesel futures to rise above the psychologically key level of $1,000 per ton.

Barbara Lambrecht, an analyst at Commerzbank, suggested that high oil prices would endure for some time: "Oil for short-term delivery is being traded at a significant premium, which is an indication of tight supply; at the same time, demand for oil is continuing to grow, [and] this is tightening the oil market, as evidenced by declining inventories."

But Sushant Gupta, research director of Asia refining at Wood Mackenzie, argued that oil's potential rise to $100 per barrel in the fourth quarter could be short lived due to global economic fragility and seasonal demand drops in the New Year.

For its part, ING in a report released Friday said the oil market is "clearly in overbought territory" and that "there is likely reluctance amongst participants to push too much higher right now.

"There is also possible nervousness that OPEC+ and specifically Saudi Arabia could start to ease cuts earlier than scheduled if prices move much higher - something we have highlighted for quite some time now."

In other oil related news on Friday, LSEG data showed that India, the world's third-largest oil importer, welcomed around 1.55 million barrels per day (bpd) of Russian oil in September, up by 16 percent compared to August when imports fell to a seven month low; traders say that Russian flagship crude grade, Urals, is being sold to India at nearly $80 per barrel, still $10 per barrel cheaper than Middle East grades.