Due to concerns about the impact of the Chinese economic outlook on fuel demand, both WTI and Brent benchmark oil prices fell in early Asian trading on Monday. However, with the support of Saudi Arabia and Russia extending the production cut agreement, both WTI crude and Brent crude have remained near their highs since mid to late November last year.
As of now, Brent crude has fallen by 49 cents, or 0.5%, to $90.16 a barrel, while West Texas Intermediate crude (WTI) has dropped by 74 cents, or 0.9%, to $86.77 a barrel.
ANZ analysts noted in a report that concerns about China's economic growth would affect the sentiment in the commodity markets. Additionally, the dollar has been strengthening for eight consecutive weeks, severely dampening investor enthusiasm.
In the past two weeks, both Brent crude and West Texas Intermediate (WTI) futures prices have risen. On Friday last week, Saudi Arabia and Russia announced a voluntary extension of the 1.3 million barrels per day production cut agreement until the end of the year, pushing Brent crude prices to their highest levels since November last year.
The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) will release their monthly reports this week. ANZ analysts said that if IEA and OPEC's oil market reports show strong signs of demand, it could push up oil prices.
Baker Hughes, a US company, stated that oil producers added one drilling rig last week for the first time since June, bringing the total to 632, but the total is still down by 127 rigs, or 17%, from the same period last year.
IG analyst Tony Sycamore said in a report that WTI crude may be forming a new high trading range, with prices ranging from $83 to $93.50, but concerns about demand from China and Europe could limit further rises in oil prices.
