An aerial view shows tugboats helping a crude oil tanker to dock at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang Province, China on July 18, 2022. cnsphoto via REUTERS / File Photo Obtaining licensing rights
SINGAPORE (Reuters) – Oil prices fell on Monday as a stronger U.S. dollar and economic concerns in China weighed on the outlook for fuel demand, but extended supply cuts by Saudi Arabia and Russia helped keep Brent crude above $90 a barrel.
By 0644 GMT, Brent crude fell 15 cents, or 0.2 percent, to $90.50 per barrel, while US West Texas Intermediate crude reached $87.08 per barrel, down 43 cents, or 0.5 percent.
“Concerns about Chinese economic growth weighed on sentiment across commodities,” ANZ analysts said in a note.
They added that this move was exacerbated by the strength of the US dollar, which kept investor appetite low, referring to the US currency, which has risen for eight consecutive weeks.
Oil prices have risen for the past two weeks in a row, with Brent holding steady at its highest levels since November on Friday, after Saudi Arabia and Russia announced last week that they would extend voluntary supply cuts of a combined 1.3 million barrels per day until the end of the year.
“Oil prices have broadly converged on our fair value estimates, but with Saudi Arabia being more aggressive than expected with its unilateral cut and demand remaining strong, we caution that the recent rally will fade,” Barclays analyst Amarpreet Singh said in a note.
The International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) are due to release their monthly reports this week, and any sign of strong demand is likely to push oil prices higher.
Mukesh Sahdev, head of downstream and oil trading at Rystad Energy, said the impact of the Saudi-led cuts will be more evident by the end of the year, when refineries finish maintenance and increase production.
“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 effects of the cuts on prices,” Sahdev added, estimating that refinery outages would peak at 10 million barrels. per day (barrels per day) in October.
In the United States, producers added an oil rig last week for the first time since June, Baker Hughes said in its weekly report, but the total number was still down 127 rigs, or 17%, below this time last year.
WTI is likely to be in the process of setting a new upper range above $83 and below resistance at $93.50 in the coming weeks, with concerns about demand in China and Europe capping further upside, IG analyst Tony Sycamore said in a note. .
(Reporting by Florence Tan and Emily Chow – Prepared by Mohammed for the Arabic Bulletin) Editing by Lincoln Feast and Miral Fahmy
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