Oil prices rose on Monday, supported by expectations that major producers will continue to reduce supply, in addition to growing hopes for the Federal Reserve to stabilize interest rates to avoid weakening the US economy.
Brent crude futures for November delivery rose by 3 cents to $88.58 per barrel at 0333 GMT, and West Texas Intermediate crude futures jumped by 9 cents to $85.64 per barrel.
Reuters reported that the slight gains in Asian trading came after Brent and West Texas Intermediate crude futures closed last week's trading at their highest levels in more than a year and a half, following their decline over the past two weeks.
Sugandha Sakdeva, Vice President of Marketing and Chief Strategist at ECME Investment Advisors, said that Brent crude prices were mainly driven by expectations of additional supply cuts by the major oil producing countries, Saudi Arabia and Russia.
Sakdeva noted that the continued rise in US oil production may limit further price increases.
Alexander Novak, Russian Deputy Prime Minister, said last Thursday that Russia had agreed with its partners in the Organization of the Petroleum Exporting Countries (OPEC) on the criteria for continuing to reduce exports, noting that an official announcement is expected to be issued with details of the planned reduction this week.
Russia announced that it would reduce exports by about 300,000 barrels per day in September, following a reduction of 500,000 barrels per day in August.
Saudi Arabia is also expected to continue reducing voluntary oil production of one million barrels per day until October.
Rachel Hardy, Vitol's chief executive, said global crude oil markets should become less tight over the next six to eight weeks due to refinery maintenance, but supplies of high-sulfur crude, which contains a high percentage of sulfur, would remain limited.
Hardy explained that due to OPEC Plus cuts, there are not sufficient supplies of high-sulfur crude for all these refineries in India, Kuwait, Jizan, Oman and China.
