After a 2% increase in the previous session, oil prices retreated on Monday as investors downplayed the long-term effects of production restrictions in Russia in favor of concerns about near-term supply and demand caused by refinery maintenance in Asia and the United States.
By 9.52 a.m. (Thai time), after gaining 2.2% on Friday, Brent crude futures dropped 76 cents, or 0.88%, to $85.63 per barrel. US West Texas Intermediate crude was trading at $78.96 per barrel, down 76 cents, or 0.95%, after climbing 2.1% the previous session.
Russia, the world’s third-largest oil producer, announced on Friday that it would reduce crude production in March by 500,000 barrels per day (bpd), or approximately 5% of output, in retaliation against western limitations on its exports imposed in reaction to the Ukraine crisis, causing prices to rise.
Last week, both contracts increased by more than 8% on hopes that demand will rise in China, the world’s largest crude importer and second largest oil consumer, after COVID curbs were lifted in December.
China’s oil demand rebound is reducing gasoline exports in February, but refiners are still shipping more than 2 million tonnes of diesel.
OPEC nation officials told Reuters that oil prices could restart their surge back to $100 per barrel later this year, bolstered by China’s demand recovery and constrained supply growth owing to a lack of investment.
