Oil near 3-month high, amid declining supply signals ‎

Oil prices changed slightly today, Tuesday, and remained hovering near their highest level in three months, which they reached on Monday, amid indications of a decline in global supplies due to production cuts by producing countries and strong demand in the United States, the largest fuel consumer in the world.

By 0135 GMT, Brent crude futures were at $85.30 a barrel, down 13 cents, or 0.15%, from the settlement price in the previous session. Front-month contracts for Brent crude reached their highest level in three months since April 13 on Monday.

According to “Reuters”, US West Texas Intermediate crude oil recorded $81.69 a barrel, down 0.1%, or 11 cents, from the settlement price in the previous session, which reached its highest level since April 14.

“Oil prices are on track to reach higher levels in 2023 in our view,” National Australia Bank analysts said in a note on Tuesday. The meeting of the Organization of the Petroleum Exporting Countries (OPEC) on Friday is a potential catalyst for expectations as we expect to extend voluntary supply cuts in Saudi Arabia for another month.

Analysts expect Saudi Arabia to extend its voluntary cut in oil production of one million barrels per day for another month, to include September, to provide additional support to the market during an online meeting with other major producers scheduled for Friday.

In June, the OPEC+ alliance, which includes OPEC and allies including Russia, reached a broader agreement to cut oil supplies until 2024, and Saudi Arabia pledged additional voluntary cuts in July. On July 3, the kingdom said it would extend the voluntary cut to include August and that it might extend for other months.

A Reuters survey showed on Monday that the Saudi cuts were less than the target, with production declining by 860,000 barrels per day in July, while total OPEC production fell by 840,000 barrels per day.

The data showing a decline in supplies coincided with the release of US figures on Monday showing that fuel demand rose to 20.78 million barrels per day in May, the highest level since August 2019.

Data issued by the US Energy Information Administration also showed that the demand for gasoline rose to 9.11 million barrels per day, the highest level since June 2022.

US crude oil and gasoline inventories were expected to decline last week, according to a Reuters poll, which estimated, on average, that crude stocks fell by about 900,000 barrels in the week ending July 28.