Oil prices hold gains with pockets of strength across physical markets

Oil is grinding its way toward a second monthly advance, although it’s yet to break decisively out of its recent, narrow range. While tensions in the Middle East and OPEC+ supply curbs have supported crude prices, higher production from outside the group, including the US, has capped the gains.

The market’s opposing drivers have prompted both Goldman Sachs Group Inc. and Bank of America Corp. to predict that rangebound trading will persist near term. Goldman Sachs sees a $20 band centered on $70 a barrel, with muted volatility, while its rival expects oil to hold between $60 and $80.

“While crude oil markets have been trading in a range, they’ve performed relatively well, year-to-date, especially considering the weakness of the broader commodity complex,” said Han Zhong Liang, an investment strategist at Standard Chartered Plc. Better-than-expected compliance from OPEC+ members with supply curbs has been supportive, he added.

Brent’s prompt spread — the difference between its two nearest contracts — has been widening into a deeper backwardation, suggesting tighter conditions. The gap was last at 83 cents a barrel, compared with 37 cents four weeks ago. The corresponding metric for US benchmark WTI has also strengthened.