Oil prices rose on Monday, reversing a portion of the losses from Friday, as investors focused their attention on tight supply conditions around the world and a deal made at last minute to avoid a U.S. Government shutdown.
Brent crude futures for December rose 18 cents or 0.2% to $92.38 per barrel at 0037 GMT, after dropping 90 cents Friday. Brent November futures were down 7 cents to $95.31 per barrel on Friday, the expiry date of the contract.
U.S. West Texas Intermediate Crude Futures gained 23 cents or 0.3% to $91.02 per barrel after losing 92cents on Friday.
Both benchmarks rose by nearly 30% during the third quarter, on the back of forecasts for a large crude supply deficit to be experienced in the fourth after Saudi Arabia extended further supply cuts until the end of the calendar year.
Four OPEC+ source told Reuters that the Organization of the Petroleum Exporting Countries with Russia, and other Allies (OPEC+) is unlikely to change its current policy on oil production when a panel convenes on Wednesday. This is because tighter supply and increasing demand are driving an increase in oil prices.
Oil prices began the week strong amid concerns about supply. No policy change is expected by OPEC+, but the fact that the U.S. Government did not shut down over the weekend was a relief.
He said that future demand patterns will determine whether the market continues to rise.
The risk of a shutdown was pushed back to mid-November by a last-minute decision made by Republican House of Representatives speaker Kevin McCarthy, who turned to Democrats for a short-term financing bill. This means that the U.S. Federal Government's 4 million plus employees can continue to count on their paychecks.
Baker Hughes, a leading energy services company, said that the U.S. oil rig count, a key indicator of future production, dropped by seven in the week ending Sept. 29 to 623, its lowest level since February 2022.
According to Reuters' Friday survey of 42 economists, Brent will average $89.85 a bar in the fourth quarter. By 2024 it is expected to reach $86.45.
Investors remained cautious as China's factory output expanded at a slower rate in September. A private-sector study showed this on Sunday.
After a series of modest policies, the world's second largest economy has shown some signs of stabilization. However, the outlook is clouded due to a property crash, declining exports, and high youth unemployment. This raises fears about a weakening fuel demand.