The recently extended Saudi Arabia’s and Russia’s combined output cuts of 1.3 million barrels per day to the end of the year and record demand have pushed crude prices almost 30% higher this quarter. The rise from $67 to almost $93 on Tuesday is certainly posing a new challenge for central banks around the world in their fight against inflation.

U.S. oil output from top shale-producing regions is expected to fall to 9.393 million barrels per day (bpd) in October, the lowest level since May 2023, according to the U.S. Energy Information Administration. That would be a third consecutive monthly fall.

Investors are eagerly awaiting the Fed’s interest rate decision on Wednesday to assess the outlook for economic growth and fuel demand. The Fed is widely expected to keep interest rates on hold, but the focus will be on its projected policy path.

Oil prices pulled back slightly on Wednesday with investors uncertain when peak rates will be hit and how much of an impact it will have on energy demand. Prices fell despite U.S. crude oil stockpiles falling last week by about 5.25 million barrels, according to the American Petroleum Institute figures released on Tuesday.

Source: TradingView

Wednesday’s pull back is merely unwinding strongly overbought momentum conditions and we expect a resumption of the rally to a triple digit level in the months ahead. The key reason is that significantly lower OPEC+ supply and higher demand more than offset significantly higher U.S. supply. Given the impulsive nature of the breakout levels to $100 a barrel appear easily achievable.