Oil prices drift lower; producers set to outline future output levels
Investing.com — Oil prices edged lower Monday, handing back some of the previous week’s strong gains but remaining near three-week highs on expectations that major producers will keep supplies tight.
By 05:05 ET (09.05 GMT), the U.S. crude futures traded 0.2% lower at $85.42 a barrel, while the Brent contract dropped 0.2% to $88.42.
Both contracts ended last week at their highest levels in more than half a year, with the Brent contract gaining just under 5% over the course of the week, and the WTI contract over 6%, helped by a substantially bigger-than-expected draw in U.S. inventories.
Volumes are limited Monday, with the U.S. on holiday, and traders appear to have banked some profits as they await news of the expected output levels from some of the top producers in the world.
Russian Deputy Prime Minister Alexander Novak said late last week that Moscow had reached a new deal with its OPEC peers to further cut supplies, and will outline more reductions in production this week.
More importantly, Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, is widely expected to shortly announce its decision over whether to extend a voluntary one million barrel per day oil production cut into October.
“We believe that the Saudis will likely roll over the cut into October, as they will not want to put any renewed downward pressure on the oil market, although fundamentally, the market should be able to absorb the return of these barrels, given the large deficit forecast for the rest of the year,” said analysts at ING, in a note.
Helping last week’s gains was the news that while U.S. nonfarm payrolls grew more than expected in August, the unemployment rate rose and wage growth steadied. This
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