Oil prices edged up on Monday, recouping some of the losses suffered at the end of last week, as investors focused on a tight global supply outlook. At the same time, a last-minute deal that avoided a US government shutdown restored risk appetite.
According to Reuters, Brent December crude futures rose 25c, or 0.3%, to $92.45 a barrel by 4.15am GMT (6.15am) after falling 90c on Friday. Brent November futures settled down 7c at $95.31 a barrel at the expiry of the contracts on Friday.
US West Texas Intermediate crude futures gained 29c, or 0.3%, to $91.08 a barrel, after losing 92c on Friday.
Both benchmarks rallied nearly 30% in the third quarter on forecasts of a wide crude supply deficit in the fourth quarter after Saudi Arabia and Russia extended additional supply cuts to the end of the year.
Opec and other allies, or Opec+, is unlikely to tweak its current oil output policy when the panel called the joint ministerial monitoring committee meets on Wednesday, four Opec+ sources said, as tighter supplies and rising demand drive an oil price rally.
“Oil prices started the week on a strong note amid supply concerns with no policy change by Opec+ expected, while the avoidance of a US government’s shutdown at the weekend gave some relief,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.
Read also Nigeria’s petrol imports drop amid higher oil prices
“Still, whether the market will rise further will depend on future demand trends,” he said.
While Opec+ is not expected to change its output policy given the recent strength in the market, Saudi Arabia could start to ease its additional voluntary supply cut of 1-million barrels per day (bpd), said ING analysts in a note on Monday.
Activity expanded
“The Saudis have said that there is still concern over Chinese demand. However, PMI data out at the weekend will provide some confidence with China’s manufacturing PMI returning to expansion territory in September for the first time since March.”
Official data on Saturday showed that China’s factory activity expanded for the first time in six months in September, adding to a run of indicators suggesting the world’s second-largest economy has begun to stabilise.
However, a private-sector survey on Sunday was less encouraging, showing the country’s factory activity expanded at a slower pace in September.
Indeed, a durable recovery in China’s economy is being delayed by a property slump, falling exports and high youth unemployment, raising fears of weaker fuel demand.
Read also Oil prices dip as demand concerns outweigh supply expectations
Elsewhere, a last-minute decision by Republican House of Representatives Speaker Kevin McCarthy to turn to Democrats to pass a short-term funding bill pushed the risk of a shutdown to mid-November, meaning the US federal government’s more than 4-million workers can count on continued pay cheques for now.
Amplifying supply fears, the US oil and gas rig count, an early indicator of future output, fell by seven to 623 in the week to September 29, the lowest since February 2022, energy services firm Baker Hughes said in its closely followed report on Friday.
Brent is forecast to average $89.85 a barrel in the fourth quarter and $86.45 in 2024, according to a survey of 42 economists compiled by Reuters on Friday.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
