Oil prices head for biggest monthly gains in more than a year

Oil prices hovered near their highest level in three months on Monday, and are heading for their biggest monthly gain in more than a year, amid expectations that Saudi Arabia will extend the voluntary production cut into September and global supplies become scarce.

By 0005 GMT, Brent crude futures fell 9 cents to $84.90 a barrel. US West Texas Intermediate crude also fell 17 cents, to record $80.41 a barrel

According to Reuters, the September Brent crude contract expires later on Monday. The October contract was the most active, recording $84.23 a barrel, down 18 cents.

Brent and West Texas Intermediate settled on Friday at their highest levels since April, continuing their gains for the fifth week in a row, after prices were supported by tight global oil supplies and expectations of an end to US interest rate hikes. And the two benchmarks are on their way to ending July with the largest monthly gain since January 2022.

Analysts said that Saudi Arabia is expected to extend the voluntary cut in its oil production, at the rate of one million barrels per day, for another month, to include September.

Goldman Sachs analysts said in a note on July 30, “Oil prices have risen 18% since mid-June, as the record rise in demand and the reduction in Saudi supply led to the return of deficits in the markets, amid the market abandoning the state of pessimism about growth.”

The analysts added, “We still expect the additional Saudi cut of one million barrels per day to continue until September and to halve from October.”

The bank maintained its forecast for Brent crude at $86 a barrel for December, and expects prices to rise to $93 in the second quarter of 2024.