In a shift from its recent bullish trend, Brent International Benchmark experienced a dip in European trading on Monday. This decline marked the first in five consecutive days after achieving an eight-month high, primarily attributed to profit-taking among investors.
Despite this temporary setback, the global oil market remains poised for potential gains, fueled by mounting speculations that both Saudi Arabia and Russia are contemplating extending their voluntary production cuts for an additional month.
Brent crude, a key indicator of global oil prices, saw a 0.6% drop, settling at $88.32 per barrel during the session. Earlier in the trading day, it briefly touched $88.88. This retracement followed a notable 2.4% surge recorded on Friday, marking the fourth consecutive day of gains and reaching an impressive eight-month pinnacle of $88.89.
Last week, Brent recorded a noteworthy ascent of 5.75%, marking its first weekly gain in three weeks and the most substantial increase since March.
The move towards voluntary production cuts by both Saudi Arabia and Russia has significantly impacted the market’s dynamics. Riyadh initiated a production cut of one million barrels per day (bpd), while Moscow curtailed oil exports by 500,000 bpd. Both nations have subsequently opted to extend these measures, pledging continued reductions in production and exports for several more months.
Market analysts contend that the oil industry is now on a trajectory toward a substantial deficit. This projection is based on the assumption that the Saudi cuts will exacerbate market shortages, potentially leading to a shortfall of up to three million bpd in the third quarter of the year, according to some estimates.
