A regular oil stock with strengths in the entire physical market

Oil prices were firm after rising in the previous session, with some strength in the physical market supporting broad sentiment.

Brent is trading near $83 a barrel after rising 1.1% on Monday, while West Texas Intermediate is below $78. There have been recent signs of purchasing activity by US and Chinese refineries, pushing up prices for US grades. Time spreads have also strengthened, suggesting short-term tightness.

Against this backdrop, traders will be watching for further information on the outlook from participants at International Energy Week in London, a major industry gathering that begins late Tuesday. Russell Hardy, CEO of Vitol Group, is scheduled to be a speaker on the first day.

Oil prices are moving steadily towards their second monthly rise, but have yet to definitively break out of their recent narrow range. Tensions in the Middle East and OPEC+ supply restrictions are supporting oil prices, but increases in production outside the group, particularly in the United States, are holding back the rise.

Given the adverse market forces, Goldman Sachs Group Inc. and Bank of America expect continued range-bound trading in the short term. Goldman sees subdued volatility and a $20 band around $80 a barrel, while rivals expect oil to hover between $60 and $80 a barrel.

Han Zhong Liang, investment strategist at Standard Chartered, said: “While the oil market remains range bound, it has performed relatively well so far this year, especially given the weakness in the broader commodity complex. ” he said. He added that better-than-expected compliance with supply curbs by OPEC+ countries was helping.

Brent's prompt spread (the difference between the two closest contracts) has widened into a deeper backwardation pattern, suggesting conditions are tougher. That's 86 cents per barrel compared to 37 cents four weeks ago. The corresponding index of the US benchmark WTI was also strengthened.

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