Oil prices rose slightly on Monday, recouping some of the losses suffered at the end of last week, as investors focused on a tight global supply outlook and a last-minute deal averting a U.S. government shutdown revived risk appetite.
Brent December crude futures rose 49 cents, or 0.5%, to $92.69 a barrel at 06:45 GMT, after falling 90 cents on Friday. Brent November futures fell 7 cents to $95.31 a barrel when it expired on Friday.
West Texas Intermediate (WTI) crude oil futures rose 55 cents, or 0.6%, to $91.34 a barrel after losing 92 cents on Friday.
Both indicators gained almost 30% in the third quarter on forecasts of a wide crude supply gap in the fourth quarter after Saudi Arabia and Russia extended additional supply cuts until the end of the year.
Russia and its other allies, the Organization of the Petroleum Exporting Countries (OPEC+), are unlikely to make changes to their current oil production policy when the Joint Ministerial Monitoring Committee panel meets on Wednesday, as supplies are tightening.
Oil prices started the week on a strong note as OPEC+ does not expect any policy changes and supply concerns. Avoiding a US government shutdown provided some relief. Still, whether the market moves higher will depend on future demand trends.
OPEC+ is not expected to change its production policy, however, Saudi Arabia is expected to ease an additional voluntary supply cut of 1 million barrels per day (bpd).
The Saudis say concerns remain about demand in China. But PMI data released over the weekend provides some confidence, with China’s manufacturing PMI returning to expansion territory in September for the first time since March.
Official data on Saturday showed China’s factory activity expanded in September for the first time in six months, adding to a string of indicators that the world’s second-largest economy is beginning to stabilize.
But a private sector survey on Sunday was less encouraging, showing the country’s factory activity rose at a slower pace in September.
A sustained recovery in China’s economy is being delayed by a deep real estate slump, falling exports, and high youth unemployment, raising fears that fuel demand will weaken.
On the other hand, in the US, Republicans’ last-minute decision to turn to Democrats to pass a short-term financing bill postponed the risk of a shutdown until mid-November. That means more than 4 million employees of the U.S. federal government can be relied upon to continue paying salaries for now.
Reinforcing supply fears, the US oil and gas rig count, an early indicator of future production, fell by 7 to 623 on Sept. 29, the lowest since February 2022, Baker Hughes said.
Brent is expected to average $89.85 per barrel in the fourth quarter and $86.45 in 2024, according to a survey.