SINGAPORE – Oil prices rose slightly on Monday, supported by forecasts of a widening supply gap in the fourth quarter after Saudi Arabia and Russia extended cuts and by optimism about a recovery in demand in China, the first global importer of crude oil.
Brent crude futures rose 5 cents, or 0.1 percent, to $93.98 a barrel by 0027 GMT, while U.S. West Texas Intermediate crude was at $90.92 a barrel , up 15 cents, or 0.2 percent.
“China’s stimulus policy, the resilience of US economic data and ongoing OPEC+ production cuts are the bullish factors supporting the trend. oil “The upward movement of the market,” said Tina Teng, an analyst at CMC Markets, referring to the reduction in the reserve ratio by China’s central bank last week to increase liquidity and support its economy.
READ: China cuts bank reserve ratio for second time in 2023 to boost recovery
Brent and WTI rose for three straight weeks to their highest levels since November after Saudi Arabia and Russia extended their supply cuts until the end of the year under plans to OPEC+ group and that Chinese refineries have increased their production, driven by strong export margins. .
Both contracts are also on track for their largest quarterly increase since Russia’s invasion of Ukraine in the first quarter of 2022.
“Production cuts, led by Saudi Arabia, stabilized the market in July but now risk pushing it into a deficit of 2 million bpd (barrels per day) in the fourth quarter,” analysts said. ‘ANZ in a note.
READ: Oil jumps 2% to 10-month high as OPEC forecasts tight supplies
Global oil by contrast, demand growth is on track to reach 2.1 million b/d, they added, in line with forecasts from the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC).
“The subsequent inventory reduction in the fourth quarter leaves the market exposed to further price surges in 2024,” ANZ said.
Traders will be watching central bank decisions, including the Federal Reserve, regarding interest rate policy this week.
“The Fed is likely to hold off on rate hikes this time, but it will likely remain hawkish,” said CMC’s Teng.
A pause in US rate hikes could weaken the greenback, making dollar-denominated commodities such as oil more affordable for holders of other currencies.
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