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Prices have seen a sustained rally, with both key benchmarks
notching up their sixth consecutive weekly gains last week.
On Monday, Brent crude futures slipped 24 cents to $86 a barrel
by 0820 GMT, while U.S. West Texas Intermediate crude was at
$82.55 a barrel, down 27 cents.
Despite the United States losing its top credit rating last
week, the underlying global macroeconomic backdrop still appears
upbeat, said PVM analyst Tamas Varga.
Stuttering global factory activity is being countered by revived
service sectors, inflation is being mitigated, the job market in
the U.S. is resilient, and peak interest rates in major
economies might be close, he noted.
On the supply side, the world's top exporter Saudi Arabia on
Thursday extended its voluntary production cut of 1 million
barrels per day (bpd) to the end of September, keeping the door
open for more.
In line with production cuts, Saudi Aramco raised on Saturday
the official selling prices for most grades it sells to Asia for
a third month in September.
Russia added to the crunch with its announcement to cut oil
exports by 300,000 bpd in September.
Alongside these additional cuts and estimates of significant
depletion in oil inventories in coming months, said Varga, "the
fundamental backdrop becomes blatantly encouraging."
In focus, however, is Chinese economic data this week to gauge
Beijing's appetite for more stimulus measures to support the
world's second-largest economy, following a dismal second
quarter.
"Oil prices could consolidate around the $85 a barrel level
(Brent) for a while, capped by ongoing concerns about the pace
of China's recovery and doubts about how long Saudi and Russia
will continue to curb production and exports, respectively,
given the spare capacity on hand," said Suvro Sarkar, lead
energy analyst at DBS Bank.
(Reporting by Natalie Grover; Additional reporting by Florence
Tan and Emily Chow; Editing by Jamie Freed, Miral Fahmy and
Louise Heavens)
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