Crude oil prices rose as signs of a weakening crude market were offset by soaring premiums for fuels like gasoline and diesel.
West Texas Intermediate crude rose as much as 1.5% to $61 a barrel, posting a third straight day of gains. In addition to rising fuel premiums, technical traders known as commodity trading advisors could potentially spur additional buying in the coming days, according to consultancy Energy Aspects.
"A larger CTA buying trigger above $64.50 tilts the balance of risks to the upside," said James Taylor, head of quantitative services at Energy Aspects. However, volatility could be limited by hedging flows from traders, he added.
Crude oil prices have declined this year after posting losses for the past three months. This prolonged slump has been driven by widespread expectations of a global surplus, with OPEC and its allies easing production curbs while drillers outside the alliance are also adding barrels.
The flash price spread for West Texas Intermediate crude has narrowed to a premium of just 7 cents per barrel on the nearest contract over the next, indicating that the bullish backwardation price structure is weakening as the market is expected to remain oversupplied.
However, the refined product market remains strong. Healthy fuel premiums—one benchmark for European diesel prices is at its strongest since early last year—alongside broader geopolitical risks, have helped keep crude prices stable.
"It's probably fair to conclude that without strong support from refined products, crude oil prices would be lower," said Tamas Varga, an analyst at brokerage firm PVM. "The narrowing of backwardation on WTI and Brent is certainly noteworthy; however, unless refined products are decisively removed, and when that will happen remains to be seen, a major sell-off in outright prices seems unlikely in the near term."
OPEC is scheduled to release its monthly market analysis on Wednesday, while the International Energy Agency (IEA) will release its annual outlook on the same day. The IEA has forecast a record annual oversupply for 2026 and will update its outlook in its monthly summary on Thursday.
WTI for December delivery rose 1% to $60.91 a barrel at 10:23 a.m. in New York. Brent for January delivery edged up 1% to $64.90 a barrel. (alg)
Source: Bloomberg
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