By Adedapo Adesanya
After three sessions of gains that followed extended production cuts from Saudi Arabia and Russia, oil prices fell on Tuesday as investors took profits, leaving the Brent crude futures down by 9 cents to $94.34 a barrel after it hit a session peak of $95.96, as the US West Texas Intermediate crude futures dropped 28 cents to close at $91.20 per barrel after earlier reaching $93.74 a barrel, also the highest since November.
Despite the profit-taking, expectations remain that Brent will trade in a range of $90-100 per barrel over the coming months, with a year-end target of $95 per barrel.
Recall that the market became stronger after two key members of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+), Saudi Arabia and Russia, extended combined supply cuts of 1.3 million barrels per day to the end of the year.
Saudi Oil Minister, Prince Abdulaziz bin Salman, defended the action amid criticisms from the US, saying international energy markets need light regulation to limit volatility. He also warned of uncertainty over Chinese demand, European growth and central bank measures to tackle inflation.
Further, US oil output from top shale-producing regions is on track to fall to 9.393 million bpd in October, the lowest since May 2023, according to the US Energy Information Administration (EIA).
The market has turned its attention to interest rate decisions due this week from the central banks of the US, Britain, Japan, Sweden, Switzerland and Norway.
The US Federal Reserve is expected to hold benchmark interest rates at the current 5.25 per cent -5.50 per cent range on Wednesday as core inflation crawls toward the bank’s 2 per cent target.
The American Petroleum Institute (API) reported a large 5.25-million-barrel draw in US crude inventories, offsetting last week’s 1.174-million-barrel build.
Analysts were expecting an inventory draw of 2.667 million barrels for the week. The total number of barrels of crude oil moves so far this year is now squarely in the red, according to API data, and there is a net draw in crude inventories since April of more than 52 million barrels.
Official government data from the EIA will be released on Wednesday, and if it drops, it could lend further support to prices.
Modupe Gbadeyanka