Oil Approaches Five-Month Highs Amid Anticipated Decrease in Supplies

On Monday, oil prices stabilized near their highest levels in five months, buoyed by various factors including expectations of declining supplies due to OPEC+ production cuts, attacks on Russian refineries, and robust data from the Chinese manufacturing sector indicating improved demand.

As of 1115 GMT, Brent crude prices dipped by ten cents to $86.90 a barrel, following a 2.4 percent increase last week. Similarly, West Texas Intermediate (WTI) crude fell three cents to $83.14 a barrel after registering a 3.2 percent gain last week.

Trading volumes were anticipated to be subdued on Monday due to the Easter holiday observed in several countries.

The OPEC+ alliance, comprising the Organization of the Petroleum Exporting Countries (OPEC) and its allies, committed to extending production cuts until the end of June. This decision is expected to lead to a reduction in crude supplies during the summer in the Northern Hemisphere.

Russian Deputy Prime Minister Alexander Novak announced on Friday that Russian oil companies would prioritize reducing production rather than exports in the second quarter of the year to ensure equitable distribution of production cuts among OPEC+ member states.

Furthermore, drone attacks targeted several Russian oil refineries, contributing to expectations of reduced Russian fuel exports.

Oil prices also found support from an official factory survey released on Sunday, indicating that manufacturing activity in China expanded for the first time in six months in March. This development bolstered demand for oil in the world’s largest crude importer, despite ongoing pressures from the real estate crisis on the economy.