Oil prices fell on Monday as the stronger dollar and economic concerns in China weighed on the fuel demand outlook; however, Brent remained above $90 a barrel, supported by tighter supply after Saudi Arabia and Russia extended supply cuts.
Brent crude fell 10 cents, or 0.1%, to $90.55 a barrel by 0541 GMT while West Texas Intermediate (WTI) crude was at $87.09 a barrel, down 42 cents, or 0.5%.
Concerns about China’s economic growth are weighing on sentiment across commodities. This pressure is further strengthened by the appreciation of the USD, which keeps investors’ appetite low.
Oil prices have soared for the past two weeks as Brent hit its highest level since November on Friday after Saudi Arabia and Russia announced last week that they would extend their voluntary supply cuts totaling 1.3 million bpd through the end of the year.
The impact of the Saudi-led OPEC+ cuts will be clearer towards the end of the year, especially in November and December, when refineries complete maintenance and increase production. Refinery cuts are estimated to reach 10 million barrels per day (bpd) in October.
Refinery maintenance will reduce crude oil demand by 2-2.5 million barrels per day in September and October, but it will rebound in November and December, partially offsetting the price effects of the outages.
The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) will release their monthly reports this week, and any sign of strong demand will likely push oil prices higher, analysts say.
Baker Hughes said in his weekly report that U.S. producers added an oil rig last week for the first time since June, but the total number is still 127, or 17 percent, below this time last year.
WTI is likely in the process of marking a new range high above $83 and below the $93.50 resistance in the coming weeks. Concerns remain that demand in China and Europe will limit a further rise.