By Shariq Khan
BENGALURU (Reuters) -Oil prices rose for the third straight session on Monday and were on pace for their biggest monthly gains since January 2022, supported by signs of tightening global supply and rising demand through the rest of this year.
More actively traded October futures were up 56 cents, or 0.6%, to $84.97 a barrel by 1:38 p.m. EDT (1738 GMT). The September Brent contract, which will expire at settlement on Monday, was trading 0.5% higher at $85.45 a barrel.
U.S. West Texas Intermediate crude futures climbed 71 cents, or 0.9%, to $81.29 a barrel.
Brent and WTI settled on Friday at their highest levels since April, gaining for a fifth straight week. Both are on track to close July with their biggest monthly gains since January 2022.
Saudi Arabia is expected to extend a voluntary oil output cut of 1 million barrels per day (bpd) for another month to include September. Saudi output fell by 860,000 barrels per day (bpd) in July, while total production from the Organization of Petroleum Exporting Countries was 840,000 bpd lower, a Reuters survey found on Monday.
“Crude prices are finishing a solid month on a high note as demand prospects remain impressive and no one doubts that OPEC+ will keep this market tight,” OANDA analyst Edward Moya said.
Oil inventories are beginning to drop elsewhere too, especially in the U.S., where the government has started refilling the Strategic Petroleum Reserve from its lowest level in multiple decades. Five analysts polled by Reuters on Monday estimated on average that inventories fell by about 900,000 barrels in the week to July 28.
“After the end of SPR releases and recession fears and a liquidity drain due to bank stability fears, which caused the markets to ignore a looming supply squeeze, the coming supply deficits are getting too big to ignore,” Price Futures Group analyst Phil Flynn said.
Goldman Sachs (NYSE:) estimated that global oil demand rose to a record 102.8 million bpd in July and it revised up 2023 demand by about 550,000 bpd on stronger economic growth estimates in India and the U.S., offsetting a downgrade for China’s consumption.
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