ALBAWABA – Oil prices dipped by more than $0.80 on the barrel on Monday, despite Saudi Arabia boosting oil prices to Asia and Europe a day earlier, news agencies reported.
Both key benchmarks notched up their sixth consecutive weekly gains last week, only to slip as demand rises on tighter supplies.
Brent crude futures slipped $0.81 to $85.43 a barrel, while West Texas Intermediate (WTI) crude settled at $81.99 a barrel, down $0.83. WTI dropped by $1 dollar early on Monday, before parring some of the losses later in the same session.
Despite the decline in oil prices, after weeks of gains, they remain relatively high, analysts have said.
"Oil prices could consolidate around the $85 a barrel level (Brent) for a while, capped by ongoing concerns about the pace of China's recovery and doubts about how long Saudi and Russia will continue to curb production and exports, respectively, given the spare capacity on hand," Suvro Sarkar, lead energy analyst at DBS Bank, told Reuters.
Despite the United States (US) losing its top credit rating last week, the underlying global macroeconomic backdrop still appears upbeat, according to PVM analyst Tamas Varga.
Staggered global factory activity is being countered by revived service sectors, inflation is being mitigated, the job market in the US is resilient, and peak interest rates in major economies might be close, he noted to Reuters.
On the supply side, the world's top exporter Saudi Arabia on Thursday announced extending its voluntary production cut of 1 million barrels per day (bpd) to the end of September. The Saudi statement also left the door open for more cuts if necessary.
Likewise, Russia has announcement its plan to cut oil exports by 300,000 bpd in September.
Meanwhile, Saudi Aramco has raised the official selling prices for most of the grades it sells to Asia for a third month in September, on Saturday.
