Oil holds onto gains as investors bet on tighter supply By Reuters

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By Florence Tan

SINGAPORE (Reuters) – Oil prices edged lower on Monday, paring recent gains on expectations of OPEC+ cuts, an attack on Russian factories and rising Chinese output.

was down 17 cents, or 0.2%, to $86.83 a barrel by 0017 GMT after rising 2.4% last week. US West Texas Intermediate crude was at $83.06 a barrel, down 11 cents, or 0.1%, following a 3.2% gain last week.

Businesses are expected to be light on Monday as several countries close for the Easter holiday.

Both benchmarks rose for the third month in a row, with Brent holding above $85 a barrel since mid-March, while the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, pledged to extend production cuts until the end of June. which can limit oil production during the northern hemisphere summer.

Russian Deputy Prime Minister Alexander Novak said on Friday that his oil industry would focus on reducing output rather than exporting in the second quarter to spread prices in line with other OPEC+ member countries.

Drone attacks have knocked out several Russian factories, which are expected to reduce Russian oil exports.

“Environmental risks from junk food and heavy consumption add to the demand for Q2 24,” Energy Aspects analysts said in a statement.

About 1 million barrels per day of Russia are involved in the protests, which involve high-sulfur crude oil exported to factories in China and India, the adviser added.

In Europe, oil demand was stronger than expected, rising 100,000 bpd for the year in February, analysts at Goldman Sachs said, against a forecast of a 200,000 bpd contraction in 2024.

Strong European demand, softness in US supply growth and OPEC+ expansion down to 2024 outweigh the risk from continued softness in Chinese demand, he said in a statement.

“We see the risk of Brent forecast to be around $83/bbl in 2024Q4 as a gradual upward curve,” the analysts said.

However, manufacturing activity in China grew for the first time in six months in March, an official factory survey showed on Sunday, supporting oil demand for the world’s biggest exporter, even as problems in the financial sector continue to drag on the economy.

Investors are also looking to the US economic data for signs of when the Federal Reserve will cut interest rates this year which will support the global economy and oil.

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