Benchmark US crude oil hit US$90 a barrel for the first time since November, the latest milestone in a march higher that's been led by output cuts from Saudi Arabia and Russia as well as record global consumption.

West Texas Intermediate futures gained as much as 1.7 per cent, briefly nudging above US$90. Brent crude also climbed, topping US$93 a barrel.

The International Energy Agency warned this week that continued supply cuts by the two OPEC+ leaders are likely to create a “significant supply shortfall” and threaten further price volatility. That came a day after OPEC said the market is facing a deficit of more than 3 million barrels a day next quarter, potentially the biggest in more than a decade.

US Crude Futures Hit US$90 | Prices have rallied as supply cuts tighten the market
Prices have soared more than 30 per cent since late June, as demand in the US and China — the top two consumers — remains robust while OPEC+ leaders Saudi Arabia and Russia constrict supplies. The rally is a boost to the economies of oil-producing nations, but is raising fresh questions over whether oil prices will derail efforts by central banks across the globe to quash inflation. 

“Heading into the fourth quarter, the market looks a lot tighter,” Ben Cahill, senior fellow at the Center for Strategic International Studies, told Bloomberg television. “The supply cuts from OPEC+ are starting to bite and it looks like we're heading for a pretty significant supply deficit — so that does mean it's bullish for prices.” 

Signs of near-term strength are abounding at the moment. Some physical grades are commanding hefty premiums to their benchmarks, indicating that refiners are snapping up barrels. Meanwhile, fuels are trading far above crude prices as processors try to keep pace with strong end-user demand.

Spreads between monthly WTI futures are showing a premium for near-term contracts, a condition known as backwardation that typically symbolizes scarce availability of barrels. 

WTI for October delivery rose 1.5 per cent to US$89.88 a barrel at 8:50 a.m. in New York.
Brent for November settlement gained 1.4 per cent to US$93.17 a barrel.