ALBAWABA – Oil inventories dropped significantly in July amid deep supply cuts, as oil prices slip below their three-month high on Monday, news agencies reported.
Brent crude futures were down to $84.69 a barrel by 0632 GMT, according to Reuters, while West Texas Intermediate crude was at $80.36 a barrel.
Yet, oil prices are expected to rise on tighter supply, official United States (US) and international agencies confirmed.
The September Brent contract will expire on Monday, while the more active October contract was at being settled at $84.16 a barrel, down 25 cents.
Brent and WTI settled on Friday at their highest levels since April, gaining for a fifth straight week.
Tightening oil supplies globally, amid exhausted oil stockpiles around the world, and expectations of an end to US interest rate hikes bolstered demand and supported prices.
Both crudes are on track to close July with their biggest monthly gains in oil prices since January 2022.
Oil prices ready to soar
"While it seems that crude may have priced in all the good news on US inflation and economic resiliency for the time being, it may continue inching higher still," Vandana Hari, founder of oil market analysis provider Vanda Insights, told Reuters.
"Most of the strong buying activity has been occurring during the US trading hours; action during the Asian session remains relatively slow and a poor indicator of sentiment," Hari added.
Meanwhile, Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day for another month to include September, Reuters’ analysts said.
The announcement is expected to come out this Friday during a meeting of OPEC+, the Organization of the Petroleum Exporting Countries and allies including Russia. OPEC+ pumps around 40 percent of the world's crude.
"Oil prices are up 18 percent since mid-June as record-high demand and Saudi supply cuts have brought back deficits, and as the market has abandoned its growth pessimism," Goldman Sachs analysts said in a July 30 note, as reported by Reuters.
The bank maintained its Brent forecast at $86 a barrel for December and expects oil prices to rise to $93 in the second quarter of 2024.
