By Florence Tan
SINGAPORE (Reuters) – Oil prices rose slightly on Monday, supported by forecasts of a widening supply gap in the fourth quarter after Saudi Arabia and Russia extended their cuts and optimism about a recovery in demand in China, the world’s largest 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, higher of 15 cents, or 0.2%.
“China’s stimulus policy, resilient US economic data and ongoing OPEC+ production cuts are the bullish factors supporting the oil market’s upward movement,” said CMC Markets analyst Tina Teng, referring to the reduction in the reserve ratio by the Chinese central bank last week to increase liquidity. and support its economy.
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 barrels per day in the fourth quarter,” ANZ analysts said in a note .
By contrast, growth in global oil demand is on track to reach 2.1 million bpd, they added, in line with forecasts from the International Energy Agency and the Organization of the United Nations oil exporters (OPEC).
“The subsequent inventory reduction in the fourth quarter exposes the market 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 rising U.S. rates could weaken the greenback, making dollar-denominated commodities like oil more affordable to holders of other currencies.
(Reporting by Florence Tan; editing by Stephen Coates)