Oil continues to rise

Oil prices rose for a second day as hedge funds argued that tightening supply would continue the recovery after last week’s pause. U.S. crude rose as much as 0.7% to trade above $90 a barrel. Hedge funds increased their bullish positions on U.S. crude to the highest level since February 2022 on higher prices and lower volatility, while JPMorgan Chase & Co. raised its forecast for an “oil supercycle.” Oil prices have risen by more than a quarter since late June, boosted by their biggest quarterly gains since March 2022, helped by supply cuts by OPEC+ mainstays Saudi Arabia and Russia and brighter outlooks for the two biggest economies, the U.S. and China. The gains reignited talk of a $100-a-barrel price hike and added to price pressure on importers. “We remain bullish as Saudi Arabia continues production cuts and both China and the US show reasonable demand. We don’t see a trigger for a reversal at the moment,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai. There are many signs of tightness in the physical market. Russia temporarily banned diesel and gasoline exports last week, raising fuel prices. In addition, US crude inventories have fallen again and oil is on a backwardation trend, suggesting strong competition for near-term supplies. Meanwhile, China is preparing for the Golden Week holiday from Friday, with a longer-than-usual break in its biggest oil importer to boost demand for jet fuel. More than 21 million people are expected to fly over the eight days, following record air passenger traffic in July and August.