Oil prices fell on Monday, 31 July, but were hovering near three-month highs and were set to post their biggest monthly gains in more than a year on expectations that Saudi Arabia would extend voluntary output cuts until September and tighten global supply.
Brent oil futures fell 45 cents to $84.54 a barrel by 03:15 GMT, while US West Texas Intermediate crude was at $80.25 a barrel, down 33 cents.
The September Brent contract expires later on Monday. The more active October contract was at $84.23 a barrel, down 18 cents.
Brent and WTI closed on Friday 28 July at their highest levels since April, gaining for the fifth week in a row as tightening global oil supplies and expectations of an end to US interest rate hikes supported prices. Both are on track to close July with their biggest monthly gains since January 2022.
“While it looks like oil may have priced in all the good news on inflation and US economic resilience for now, it could continue to rise further,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“Most of the strong buying activity has occurred during US trading hours; action during the Asian session remains relatively slow and a poor sentiment indicator,” Hari added.
Meanwhile, Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day (bpd) for another month, including September, analysts said.
“Oil prices have risen 18% since mid-June as record high demand and Saudi supply cuts have brought back deficits, and as the market has abandoned its growth pessimism,” Goldman Sachs analysts said in a 30 July note.
“We still expect the extra 1 million bpd cut to last until September and be halved from October onwards.”
The bank maintained its Brent forecast at $86 a barrel for December and expects prices to rise to $93 by the second quarter of 2024.
Goldman Sachs estimated global oil demand rose to a record 102.8 million bpd in July and revised up 2023 demand by about 550,000 bpd on stronger economic growth estimates in India and the United States, offsetting a downgrade to China’s consumption.
“The firmer demand is driving a moderately larger deficit in Q2 2023 than expected, averaging 1.8 million bpd, and a modest 0.6 million bpd deficit in 2024,” it said.
Exxon Mobil CEO Darren Woods said the company expects record oil demand this year and next year, and that this could help boost energy prices in the second half of the year.
In the US, energy companies reduced the number of oil rigs in July for the eighth straight month by one to 529, Baker Hughes said in its weekly report on Friday 28 July.
O.Económico
