Oil prices showed minimal change on Monday, with Brent crude settling at $90.64 per barrel, down just 1 cent, and U.S. West Texas Intermediate (WTI) crude settling at $87.29 per barrel, down 22 cents. These prices held steady following recent Saudi and Russian crude output cuts and remained above $90 a barrel for the first time in 10 months.
Last week, Saudi Arabia and Russia jointly announced an extension of their voluntary supply cuts, amounting to a combined 1.3 million barrels per day (bpd), which will remain in effect until the end of the year. These cuts have offset concerns about global oil demand due to a slowdown in the Chinese economy.
While China’s economic challenges are seen as having a localized impact rather than a global one, the reduced oil supply has helped stabilize prices. However, ongoing storms and floods in eastern Libya have disrupted crude supply, with the closure of four major oil export ports, including Ras Lanuf, Zueitina, Brega, and Es Sidra.
On another note, European refineries are anticipating a light maintenance season this autumn, as they seek to capitalize on high margins, potentially boosting crude demand. Offline refinery capacity in Europe is estimated at around 800,000 bpd, down 40% year-on-year, according to Wood Mackenzie.
Investors are closely watching a series of macroeconomic data releases scheduled for this week to gauge the direction of central bank interest rate policies. The U.S. August Consumer Price Index (CPI) data, set for release on Wednesday, could influence a range of financial markets, including stocks, foreign exchange, fixed income, and commodities. The data will provide insights into potential interest rate hikes in the United States.
Additionally, the European Central Bank (ECB) is expected to announce its interest rate decision this week, and the European Commission recently downgraded its growth forecasts for the eurozone in 2023 and 2024. Meanwhile, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) will release their monthly reports, which could provide further insights into oil demand and supply dynamics.
The IEA previously lowered its 2024 oil demand growth forecast to 1 million bpd due to sluggish macroeconomic conditions, while OPEC maintained its 2.25 million bpd demand growth projection in its August report.