London — Oil prices dipped on Monday after fresh Saudi and Russian crude output cuts had driven prices to 10-month highs last week.
Saudi Arabia and Russia last week announced they will extend voluntary supply cuts of a combined 1.3-million barrels per day (bpd) until the end of the year.
Brent crude fell by 40c, or 0.44%, to $90.25 a barrel by 0848 GMT on Monday while US West Texas Intermediate crude lost 65c, or 0.74%, to $86.86.
The supply cuts overshadowed continuing concern over Chinese economic activity last week, but investors looked to be focusing on demand drivers on Monday, with the International Energy Agency (IEA) and the Organisation of the Petroleum Exporting Countries (Opec) due to release monthly reports this week.
Mukesh Sahdev, head of downstream and oil trading at Rystad Energy, said the effects of the Saudi-led cuts would be clearer by the end of the year, when refineries finish maintenance and increase production.
“Refinery maintenance will lower crude demand by 2-million to 2.5-million bpd in September and October, but it will rebound in November and December, partially offsetting the price effects of the cuts,” Sahdev added, estimating that refinery outages will peak at 10-million bpd in October.
Among economic factors in the spotlight, the European Central Bank is due to announce its monthly interest rate decision this week. In the US, meanwhile, August consumer price index (CPI) data is due on Wednesday.
“The key economic number for the US this week will be US inflation data, which is likely to influence everything from stocks to forex to fixed income and commodity prices,” said Naeem Aslam of Zaye Capital Markets.