Oil prices continue to rise due to a limited supply.

On Monday, investors focused on the potential for a growing supply gap in the fourth quarter as Saudi Arabia and Russia extended production cutbacks, pushing the price of benchmark Brent crude towards $95 per barrel.

Brent and WTI are on pace to see their largest quarterly gains since Russia's invasion of Ukraine in the first quarter of 2022 after rising for three straight weeks to reach their best levels since November.

This month, Saudi Arabia and Russia agreed to prolong their joint supply cutbacks by 1.3 million barrels per day (bpd) through the end of the year.

According to ANZ analysts, these restraints might cause a 2 million bpd market shortfall in the fourth quarter, and a subsequent inventory drawdown could leave the market vulnerable to more price increases in 2024.

Furthermore, despite its oil imports remaining strong, China, which is seen as the driving force behind rising oil demand, faces a significant danger due to its slow post-pandemic economic recovery.

Last month, industrial output and consumer spending recovered as a result of a number of stimulus measures and a surge in summer tourism. Chinese refineries also increased production due to solid export margins.

This week, attention will also be focused on central banks, notably the U.S. Federal Reserve's decision on interest rates.

Since inflationary pressure has generally been successfully reduced, there is growing agreement that peak interest rates are not far off, according to PVM's Varga.

However, he said, "Investors are still unclear as to when central banks would begin cutting them. "The 'high-for-longer' mantra would ultimately have a negative impact on economic growth and would affect oil demand."

(Sources: investing.com, reuters.com)