Oil prices edge up as markets weigh tight supply, demand woes

Global benchmark Brent crude traded slightly higher on Monday after flirting with $95 a barrel earlier in the session, as markets weighed concerns over demand against expectations of an oil shortfall. supply from Saudi Arabia and prolonged production cuts by Russia.

Brent crude futures rose 79 cents to $94.72 a barrel at 11:57 a.m. ET (3:57 p.m. GMT), while U.S. West Texas Intermediate crude futures rose $1.24 to $92 a barrel. .01 dollars.

Saudi Energy Minister Prince Abdulaziz bin Salman on Monday warned of uncertainty over Chinese demand, European growth and central bank action to combat inflation, and defended the cuts of OPEC+ in supplying the oil market.

Asked about the Chinese demand, Prince Abdulaziz said the situation “is not bad yet”.

“The jury is still not elected. That’s the fundamental question: the jury is still out.”

Both benchmarks had risen more than $1 a barrel earlier in the session, with investors focusing on supply cuts of 1.3 million barrels per day (bpd) in Saudi Arabia and Russia , extended until the end of the year.

Brent and WTI have climbed for three straight weeks to their highest level since November and are on track for their biggest quarterly gains since Russia’s invasion of Ukraine in the first quarter of 2022.

The benchmark Brent index traded in overbought territory for a 7th consecutive session, while WTI traded in overbought territory for a 5th consecutive session.

The market also saw profit-taking, said Dennis Kissler, senior vice president of trading at BOK Financial.

Production cuts from Saudi Arabia and Russia could lead to a deficit of 2 million bpd in the fourth quarter and further reduction in inventories could expose the market to further price surges in 2024, analysts said from ANZ.

The question is whether the cuts will continue next year “given the risk that higher prices will surely, at some point, boost US shale oil production”, said Callum Macpherson, head of materials. firsts at Investec.

Citi on Monday became the latest bank to predict that Brent prices could exceed $100 a barrel this year. Chevron Chief Executive Officer Mike Wirth also said he believes oil will rise above $100 a barrel in an interview with Bloomberg News.

China poses a major risk due to its slow post-pandemic economic recovery, although its oil imports have remained robust.

A round of stimulus measures and a travel boom this summer helped industrial production and consumer spending rebound last month and Chinese refineries increased output, buoyed by strong export margins.

All eyes will also be on central banks this week, in particular on a decision on interest rates from the American Federal Reserve.

The Bank of England is expected to raise interest rates once again this week, perhaps the last hurray for one of the most aggressive tightening cycles in the last 100 years, as the economy begins to slow down to worry political decision-makers.

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