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 U.S. economy.
Brent crude futures for November crept 16 cents higher to $88.71 a barrel by 0800 GMT. U.S. West Texas Intermediate crude (WTI) October futures rose 18 cents to $85.73 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 Advisors.
Sachdeva added, however, that the steady increase in U.S. oil production could limit further significant gains in price.
Russia had agreed with partners in the Organization of the Petroleum Exporting Countries (OPEC) on the parameters for continued export cuts, Russian Deputy Prime Minister Alexander Novak said on Thursday.
An official announcement detailing the planned cuts is expected this week.
Russia has already announced September export cuts of 300,000 barrels per day (bpd), following a 500,000-bpd cut in August. Saudi Arabia is also expected to roll over a voluntary 1-million-bpd cut into October.
Vitol CEO Russell Hardy said on Monday the global crude market should become less tight in the next six to eight weeks because of refinery maintenance, but supplies to complex refineries in India, Kuwait, Jizan (Saudi Arabia), Oman and China of sour crude, with higher sulphur content, will stay tight due to OPEC+ cuts.
In the U.S., job growth gained momentum in August, but the unemployment rate climbed to 3.8 percent and wage gains moderated, suggesting a cooling labour market and cementing expectations the Federal Reserve will not dampen the economy further by raising interest rates this month.
In China, manufacturing activity unexpectedly expanded in August, a PMI survey indicated, curbing some 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 home buyer borrowing rules, also supported prices.
However, investors await more substantial moves to prop up the embattled property sector, one of the main drags on the economy since China emerged from the COVID-19 pandemic.