WTI surges to the fresh YTD high above the $90.10 mark amid tighter supply expectations

• WTI prices rise to the YTD high and hold above the $90 mark for the first time since November 2022.
• IEA said the loss of OPEC+ output would cause a major supply shortfall during the fourth quarter beginning in September.
• China's economic challenges remain in the spotlight.
• Oil traders will closely watch the Chinese data including Retail Sales and Industrial Production.

Western Texas Intermediate (WTI), the US crude oil benchmark, is trading around $90.10 so far on Friday. WTI prices climb to the Year-To-Date (YTD) high and hold above the 90 mark for the first time since November 2022 amid tighter supply expectations.

The International Energy Agency (IEA) said on Wednesday that the loss of OPEC+ output would cause a major supply shortfall during the fourth quarter beginning in September. That said, a tighter supply by voluntary oil production cuts by Saudi Arabia and Russia has boosted WTI prices in recent weeks. Saudi Arabia and Russia, the world's two largest oil exporters, announced that they would prolong oil output curbs until the end of 2023. Through the end of 2023, Saudi oil output will be closer to 1.3 million barrels per day.

On Tuesday, OPEC stated in its monthly report that they are optimistic about Chinese demand throughout 2023. OPEC maintained its projection for robust growth in global oil demand in 2023 and 2024 despite challenges such as rising interest rates and higher inflation. In a monthly report, OPEC anticipated that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024, up from 2.44 million bpd in 2023. Both forecasts were unchanged from the previous month.

On the other hand, China's economic challenges remain in the spotlight, since China is the world's largest oil importer, and worsening economic conditions might influence the outlook for oil consumption. Any notable stagnation in China's industrial activity and oil consumption is likely to have a worldwide impact. This, in turn, might exert some selling pressure on the WTI prices.

Looking ahead, oil traders will monitor the Chinese data that includes Retail Sales and Industrial Production due later in the Asian session on Friday. Also, the preliminary Michigan Consumer Sentiment Index for September will be released. These events could significantly impact the USD-denominated WTI price. Oil traders will take cues from the data and find trading opportunities around the WTI prices.