Oil prices fell but supply cuts kept Brent crude above $90 a barrel

SINGAPORE (Reuters) – Oil prices fell on Monday as a stronger US 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.

And by 0644 GMT, Brent crude fell 15 cents, or 0.2 percent, to $ 90.50 a barrel, while US West Texas Intermediate crude reached $ 87.08 a barrel, down 43 cents, or 0.5 percent.

“Concerns about Chinese economic growth weighed on sentiment across commodities,” ANZ analysts said in a note.

The move was exacerbated by the strength of the US dollar, which kept investors’ appetite low, they added, 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 settling at its highest level 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 largely converged with our estimates of fair value, but with Saudi Arabia being more aggressive than expected with its unilateral cut and demand remaining strong, we would caution against the recent rally fading,” 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 visible by the end of the year, when refineries finish maintenance and ramp up production.

“Refinery maintenance will reduce demand for crude oil 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 US, producers added an oil rig last week for the first time since June, Baker Hughes said in its weekly report, but the total number is still down 127 rigs, or 17%, from this time last year.

WTI is likely to be in the process of setting a new higher range above $83 and below resistance at $93.50 in the coming weeks, IG analyst Tony Sycamore said in a note, with concerns about demand in China and Europe capping further upside. .

Our standards: Thomson Reuters Trust Principles.