Oil markets are maintaining their steady course as hedge funds double down on their bets that tightening supplies will reignite the recent rally, despite a slight pause last week.

West Texas Intermediate (WTI) gained 0.7% before settling just above the $90-per-barrel price level following the surge in hedge funds’ bullish positions on WTI, the highest since February 2022.

Brent crude oil, against which Nigerian crude oil is priced, appreciated by 0.53% to $93.76 per barrel.

JPMorgan Chase & Co. is also chiming in, joining the chorus of voices predicting an “oil supercycle.” Oil has surged by over 25% since the end of June, poised for its most substantial quarterly gain since March 2022. This robust performance is credited to supply restrictions implemented by OPEC+ heavyweights Saudi Arabia and Russia, alongside brighter economic prospects in the US and China.

The market buzz is now dominated by discussions of the elusive $100-a-barrel crude, which could have ripple effects, increasing pressure on importing nations.

Analyst Zhou Mi from the Chaos Research Institute in Shanghai remains optimistic, emphasizing Saudi Arabia’s ongoing output cuts and solid demand from both China and the US.

Meanwhile, the physical market echoes these sentiments. Russia’s recent ban on diesel and gasoline exports has already elevated fuel prices, while US crude stockpiles continue to dwindle. The oil market’s backwardated structure further underscores strong competition for immediate supplies.

China is also gearing up for its Golden Week holiday, which is expected to boost jet fuel demand in the world’s largest oil-importing nation. With over 21 million people anticipated to take to the skies during this extended break, the momentum in the air travel sector appears to be continuing.

Saudi Arabia’s Foreign Minister, Faisal bin Farhan, highlighted the role of OPEC and its allies in stabilizing energy markets, underscoring their commitment to ensuring market equilibrium during a recent United Nations speech.

As the world watches these market dynamics unfold, the future of oil prices remains uncertain but decidedly intriguing.

Oil prices saw an upward trend on Friday as concerns over Russia’s ban on fuel exports potentially tightening global supply.

This development overshadowed apprehensions of further interest rate hikes in the United States that could impact demand.

However, despite this bounce, oil prices were still on course for their first weekly decline in four weeks.

Brent crude oil gained 46 cents, or 0.5% to $93.76 per barrel while the U.S. West Texas Intermediate crude (WTI) oil surged by 65 cents, a 0.7% rise to $90.28 a barrel.

These gains were driven by growing concerns regarding tight global supply as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) continued to implement production cuts.

Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd, commented on the volatile nature of the market, stating, “Trading remained choppy amid a tug-of-war between supply fears that were reinforced by a Russian ban on fuel exports and worries over slower demand due to tighter monetary policies in the United States and Europe.”

He further noted that investors would closely monitor OPEC+ production cuts and the impact of rising interest rates, predicting that WTI would trade within a range of approximately $90 to $95.

Russia’s abrupt ban on gasoline and diesel exports to countries outside a select group of four ex-Soviet states had an immediate effect as it aimed to stabilize the domestic fuel market. This export restriction prompted a nearly 5% increase in heating oil futures on Thursday.

Tina Teng, an analyst at CMC Markets, explained, “Crude oil bounced off a session low after Russia banned diesel exports, which included gasoline. The action reversed a downside movement in crude markets following the hawkish Fed decision.”

However, she also warned that mounting concerns about a recession in the Eurozone could continue to exert downward pressure on oil prices.

The U.S. Federal Reserve recently maintained its interest rates but adopted a more hawkish stance, projecting a quarter-percentage-point increase to 5.50%-5.75% by the year-end. This decision heightened fears that higher rates might dampen economic growth and reduce fuel demand.

Also, the stronger U.S. dollar, reaching its highest level since early March, made oil and other commodities more expensive for buyers using alternative currencies.