Oil prices were heading higher on Monday on concerns that the market will be short of supply after Saudi Arabia and Russia extended their coordinated production cuts until the end of the year.
Brent crude, the international standard, ticked up 0.3% to $94.25 a barrel, extending three straight weeks of advances. West Texas Intermediate, the U.S. benchmark, climbed 0.4% to $91.17 a barrel.
Saudi and Russian cuts threaten to push the market into deficit over the coming months, which has pushed crude prices to the highest since November. Tentative signs that the Chinese economy is picking up after authorities added stimulus may also increase global demand, which could put further upward pressure on prices.
The Federal Reserve will be keeping an eye on energy prices as it makes an interest-rate decision this week. Higher fuel costs could keep inflation higher, which may prompt policy makers to keep interest rates higher than otherwise, which would be an additional drag on economic growth.
Separately, the natural gas plant in Australia that has been hit by worker strikes has returned to full production,
Chevron
(ticker: CVX) said Monday. The Wheatstone plant, which along with the nearby Gorgon facility provides some 5% of the world’s liquid natural gas, was hit by a fault last week. Chevron says the strikes won’t affect output.
Write to Brian Swint at [email protected]
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