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A gas flare burns at an oil refinery in Russia. Picture: BLOOMBERG
A gas flare burns at an oil refinery in Russia. Picture: BLOOMBERG

London — Oil prices held steady on Monday after suffering losses at the end of last week, as investors’ focus returned to a tight global supply outlook while a last-minute deal that avoided a US government shutdown restored some risk appetite.

Brent December crude futures rose 17c, or 0.18%, to $92.37 a barrel by 8.02am GMT (10.02am) after falling 90c on Friday. Brent November futures settled 7c lower at $95.31 a barrel at the contract’s expiry on Friday.

US West Texas Intermediate crude futures gained 26c, or 0.29%, to $91.05 a barrel, after losing 92c on Friday.

Both benchmarks rallied nearly 30% in the third quarter on forecasts of a wide crude supply deficit in the fourth quarter after Saudi Arabia and Russia extended additional supply cuts to the end of the year.

Opec with Russia and other allies, or Opec+, is unlikely to tweak its current oil output policy when the panel called the joint ministerial monitoring committee meets on Wednesday, four Opec+ sources said.

“Oil prices started the week on a strong note amid supply concerns with no policy change by Opec+ expected, while the avoidance of a US government shutdown at the weekend gave some relief,” said Hiroyuki Kikukawa, president of NS Trading.

“Still, whether the market will rise further will depend on future demand trends,” he said

Speaking at an event in Abu Dhabi on Monday, Opec secretary-general Haitham Al Ghais said the group still sees “oil demand as quite resilient this year, as it was last year”.

While Opec+ is not expected to change its output policy given the recent strength in the market, Saudi Arabia could start to ease its additional voluntary supply cut of 1-million barrels per day (bpd), said ING analysts in a note on Monday.

“The Saudis have said that there is still concern over Chinese demand. However, PMI data out at the weekend will provide some confidence.”

Official data on Saturday showed that China’s factory activity expanded for the first time in six months in September, adding to a run of indicators suggesting the world’s second-largest economy has begun to stabilise.

Reuters

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