Oil prices have stabilized after rising to annual highs

Benchmark oil prices continue to remain at high levels, despite slight fluctuations at the beginning of this week. 

The current Brent quote is $88.45 per barrel. Over the weekend, the asset rose sharply to the level of $89, which is much higher than the price recorded on Friday ($87). WTI oil futures rose in price from $84 to $86 per barrel. Thus, at the end of last week, Brent rose by 5.5%, WTI – by 7.2%, and both benchmarks ended trading on Friday at the highest levels since November 17 and 16, 2022, respectively.

The main driver of growth was fears of a reduction in supply in the oil market, as well as positive data on China's manufacturing industry. The Purchasing Managers' Index (PMI) in August updated the maximum since February: the index increased to 51 points from 49.2 points in July. The improvement in PMI indicators in China indicates an increase in activity in the sector, which may support oil demand.

Traders also expect that Saudi Arabia will extend the voluntary reduction of production by 1 million barrels per day in October. These production restrictions have further contributed to the rise in oil prices.

In addition, data from the oilfield services company Baker Hughes showed that the number of operating oil drilling rigs in the United States has not changed and remained at 512 units, which is the lowest since February 2022. This may also affect the supply prospects in the oil market.