Oil prices soar as supply constraints continue

Price action

• West Texas Intermediate crude for October delivery rose 0.8% to $92.29 per barrel, reaching the highest front-month contract finish since Nov. 7.
• November Brent crude, the global benchmark, rose 0.5% to $94.98 a barrel, tapping a high of $95.15 a barrel on ICE Futures Europe.
• October gasoline rose 0.3% to $2.707 a gallon, while October heating oil added 0.2% to $3.296 a gallon.

Market drivers

Investors remain optimistic about the future of oil prices despite concerns over China's economic growth and a sluggish European economy. This positive sentiment is driven by tightening supplies due to production cuts by Russia and Saudi Arabia. Last week, U.S. oil prices gained 3.7% and Brent prices rose by 3.6%, with both reaching their highest levels since November.

Crude Oil Prices Projected to Reach $100 per Barrel, Says Chevron CEO

In an interview with Bloomberg TV, Chevron CEO Wirth expressed his belief that crude oil prices will soon hit $100 per barrel. This price level has not been seen in over a year. Wirth explained, "Supply is tightening, inventories are drawing. These things happen gradually and you can see it building, and so I think…the trends would suggest that we’re certainly on our way."

While acknowledging concerns that oil at $100 could have a negative impact on the U.S. and global economies, Wirth pointed out that higher oil prices have been experienced for most of this year and all of last year without causing a recession. "The underlying drivers of the economy in the U.S. and frankly globally remain pretty healthy," he added.

Wirth emphasized that Chevron has not changed its long-term price expectations for oil. He did, however, acknowledge the market volatility experienced since the pandemic, stating, "This has been a period of time where prices have been unpredictable and volatile and not what you would call midcycle."