Futures on US West Texas Intermediate Crude Oil retreated on Monday following a sustained rally, as Saudi Arabia and Russia announced supply cuts extension through September.
WTI Futures have already registered six consecutive weeks of gains, mostly due to supply tightening.
Last week, top producer Saudi Arabia extended its voluntary oil production cut of 1 million barrels per day to the end of September and also left the door open for further moves.
In addition, Russia announced it would reduce oil exports by 300,000 barrels per day next month.
PVM analyst Tamas Varga believes that global macroeconomic outlook remains optimistic despite the downgrade of the United States’ top credit rating.
Inflation is being curbed, services sector activity is countering lower manufacturing activity, the US labor market continues to demonstrate resilience and interest rates in major economies may be nearing a peak, the analyst said.
According to PVM’s Varga, along with the additional supply cuts and forecasts of sizable depletion in oil inventories in the upcoming months, “the fundamental backdrop becomes blatantly encouraging.”
As of 12:06 GMT on Monday WTI Crude Oil Futures for September delivery were retreating 0.76% to trade at $82.19 per barrel, after earlier touching highs not seen since mid-April.
At the same time, Brent Oil Futures for October delivery were losing 0.64% on the day to trade at $85.69 per barrel.
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