Oil prices changed slightly, on Tuesday, and remained hovering near their highest level in three months, which they reached on Monday, amid indications of a decline in global supplies due to production cuts by producing countries and strong demand in the United States, the largest consumer of fuel in the world.
By 0135 GMT, Brent crude futures were at $85.30 a barrel, down 13 cents, or 0.15 percent, from the previous session's settlement price. Front-month contracts for Brent crude reached their highest level in three months since April 13 on Monday.
US West Texas Intermediate crude was at $81.69 a barrel, down 0.1 percent, or 11 cents, from the previous session's settlement price, which reached its highest since April 14.
In a note on Tuesday, National Australia Bank analysts said oil prices are on track to reach the highest price levels in 2023 in our view. The meeting of the Organization of the Petroleum Exporting Countries (OPEC) on Friday is a potential catalyst for expectations as we expect the voluntary supply cuts in Saudi Arabia to be extended for another month.
Analysts expect Saudi Arabia to extend its voluntary cut in oil production of one million barrels per day for another month to include September to provide additional support to the market during an online meeting with other major producers scheduled for Friday, according to Reuters.
In June, the OPEC+ alliance, which includes OPEC and allies including Russia, reached a broader agreement to cut oil supplies until 2024, and Saudi Arabia pledged additional voluntary cuts in July. On July 3, the kingdom said it would extend the voluntary cut to include August and that it could extend for other months.
A Reuters survey showed on Monday that the Saudi cuts were less than the target, with production declining by 860,000 barrels per day in July, while total OPEC production fell by 840,000 barrels per day.
The data showing a decline in supplies coincided with the release of US figures yesterday, Monday, showing that fuel demand rose to 20.78 million barrels per day in May, the highest level since August 2019.
Data issued by the US Energy Information Administration also showed that the demand for gasoline rose to 9.11 million barrels per day, the highest level since June 2022.
US crude oil and gasoline inventories were expected to decline last week, according to a Reuters poll which estimated, on average, that crude stocks fell by about 900,000 barrels in the week ending July 28.
