Oil prices rose to 10-month highs on Tuesday before easing, as investors took profits following three sessions of gains that followed extended production cuts from Saudi Arabia and Russia.
Global benchmark Brent crude futures settled 9 cents lower at $94.34 a barrel. Earlier, it hit a session peak of $95.96 a barrel, their highest since November.
U.S. West Texas Intermediate crude futures dropped 28 cents to $91.20 after earlier reaching $93.74 a barrel, also the highest since November.
After Brent topped $95 a barrel on Tuesday, investment bank UBS said in a note it started taking profits. Still, strategists there expect Brent to trade in a range of $90-100 per barrel over the coming months, with a year-end target of $95 per barrel.
Feeding supply concerns, OPEC+ members Saudi Arabia and Russia this month extended combined supply cuts of 1.3 million bpd to the end of the year.
Russia’s government is considering imposing export duties on all types of oil products of $250 per metric ton – much higher than current fees – from Oct. 1 until June 2024 to tackle fuel shortages, sources told Reuters on Tuesday.
Further, U.S. oil output from top shale-producing regions is on track to fall to 9.393 million barrels per day (bpd) in October, the lowest since May 2023, the U.S. Energy Information Administration said on Monday. That would be a third consecutive monthly fall.
Market participants awaited data on U.S. oil inventories, which were expected to have fallen by about 2.7 million barrels last week, according to analysts polled by Reuters. [EIA/S]
Industry data from the American Petroleum Institute was due at 4:30 p.m. EDT (2030 GMT) on Tuesday, followed by U.S. government data on Wednesday.
There are some demand uncertainties that could weigh on the market.
On Monday, Saudi Aramco CEO Amin Nasser lowered the company’s long-term outlook for global demand to 110 million bpd by 2030 from a previous estimate of 125 million bpd.
Saudi energy minister Prince Abdulaziz bin Salman defended OPEC+ supply cuts, saying international energy markets need light regulation to limit volatility, while warning of uncertainty over Chinese demand, European growth and central bank measures to tackle inflation.
Interest rate decisions are due this week from the central banks of the U.S., Britain, Japan, Sweden, Switzerland and Norway.
Wall Street’s main indexes dropped on Tuesday, with the Nasdaq and the S&P 500 hitting their lowest in over three weeks as Treasury yields rose ahead of the U.S. Federal Reserve’s policy meeting this week. [.N]
The central bank is expected to hold benchmark interest rates at the current 5.25%-5.50% range on Wednesday, as core inflation crawls toward the Fed’s 2% target.