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NEW DELHI: Oil prices were stable on Monday, amid expectations that major producers would keep supplies tight, as hopes grew for the Federal Reserve to leave interest rates unchanged to avoid dampening the US economy, according to Reuters.
Brent crude futures for November traded down 3 cents at $88.52 a barrel by 9:48 a.m. Saudi time. US West Texas Intermediate crude October futures were unchanged at $85.55 a barrel.
Both contracts ended last week at their highest in more than half a year, after two previous weeks of losses.
“Crude oil prices have been primarily driven by the anticipation of additional supply cuts from major oil-producing nations, Russia and Saudi Arabia,” said Sugandha Sachdeva, executive vice president and chief strategist at Acme Investment Advisers.
Sachdeva added that the steady increase in US oil production could limit further significant gains in price.
Russia had agreed with partners in the Organization of the Petroleum Exporting Countries on the parameters for continued export cuts, the country’s Deputy Prime Minister Alexander Novak said on Thursday.
An official announcement detailing the planned cuts is expected this week.
Russia has already said it will cut exports by 300,000 barrels per day in September, following a 500,000-bpd reduction in August. Saudi Arabia is also expected to roll over a voluntary 1 million-bpd cut into October.
Speaking on Monday at the Asia Pacific Petroleum Conference in Singapore, Vitol’s chief executive Russell Hardy said the global crude market should become less tight in the next six to eight weeks because of refinery maintenance, but supplies of sour crude, with higher sulfur content, will stay tight.
“Because of the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) cuts, there’s not sufficient supply (of sour crude) for all these complex refineries in India, Kuwait, Jazan, Oman and China,” Hardy said.
In the US, job growth gained momentum in August, but the unemployment rate climbed to 3.8 percent and wage gains moderated, suggesting that labor market conditions were cooling and cementing expectations that the Federal Reserve will not put a further dampener on the economy by raising interest rates this month.
In China, manufacturing activity unexpectedly expanded in August, data from Caixin’s manufacturing PMI survey indicated, reducing some of the pessimism about the economic health of the world’s largest oil importer.
Beijing’s economic support measures last week, such as deposit rate cuts at some of the largest state-owned banks and an easing of borrowing rules for home buyers, have also supported prices.
However, investors continue to await more substantial moves to prop up the embattled property sector, one of the main drags on the Chinese economy since it emerged from the COVID-19 pandemic.