Oil prices rose for the third consecutive session on Monday, driven by forecasts that the supply gap will widen in the fourth quarter after Saudi Arabia and Russia extended cuts and optimism that demand will recover in China.
Brent crude futures were up 71 cents, or 0.8%, at $94.64 a barrel as of 06:22 GMT, while West Texas Intermediate (WTI) crude oil futures were up 78 cents, or 0.9%, at $91.55 a barrel.
Considering the reserve ratio made by the Chinese central bank last week to increase liquidity, China’s stimulus policy, resilient US economic data, and OPEC+’s ongoing production cuts are supporting the oil market’s upward move.
This week, investors will be watching the decisions and comments of central banks, including the US Federal Reserve, on interest rate policy, as well as important economic data from China.
Brent and WTI have risen for three weeks in a row to reach their highest levels since November and are on track for the biggest quarterly rise since Russia invaded Ukraine in the first quarter of 2022.
Saudi and Russian production cuts may push the market into a 2 million barrel per day (bpd) deficit in the fourth quarter, and a subsequent decline in inventories is likely to expose the market to further price increases in 2024.
Saudi Arabia and Russia extended supply cuts until the end of the year as part of the plans of the OPEC + group. Chinese refineries also increased production due to strong export margins.
Prices appear to have no trouble finding a place above $90 per barrel, meaning the focus could shift to the demand outlook for the world’s two largest economies.
In line with the estimates of the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries (OPEC), the increase in global oil demand is on the way to reaching 2.1 million barrels per day.