Oil prices hovered near a three-month high on Monday and are on track to achieve their largest monthly gains in over a year, amid expectations that Saudi Arabia will extend voluntary production cuts into September, alongside global supply shortages. As of 00:05 GMT, Brent crude futures fell by 9 cents to $84.90 per barrel. West Texas Intermediate (WTI) crude also dropped by 17 cents, reaching $80.41 per barrel. The September Brent contract will expire later today, while the more active October contract stood at $84.23 per barrel, down by 18 cents.
Brent and WTI stabilized on Friday at their highest levels since April, continuing their fifth consecutive week of gains, supported by tight global oil supplies and expectations regarding the halt of U.S. interest rate hikes. Both crude oils are set to finish July with their largest monthly gains since January 2022.
Analysts expect that Saudi Arabia will extend its voluntary production cut of one million barrels per day for another month, including September. Goldman Sachs analysts noted in a memo dated July 30 that "oil prices have risen by 18% since mid-June, as record demand and Saudi supply cuts have led to a return of deficits in the markets, amidst a market abandonment of pessimism regarding growth."
The analysts added: "We still expect the additional Saudi cut of one million barrels per day to last until September and to be halved starting October." The bank has maintained its forecast for Brent crude at $86 per barrel for December, expecting prices to rise to $93 in the second quarter of 2024.
