Oil prices experienced an upward trajectory on Monday, briefly nearing the $95 per barrel mark, driven by expectations of a supply deficit. These expectations stem from Saudi Arabia and Russia's decisions to extend output cuts, coupled with weak shale production, which collectively overshadowed concerns about the demand for oil.

Brent crude futures, the global oil benchmark, settled at $94.43 a barrel, marking a 50-cent increase after reaching as high as $94.45. Concurrently, U.S. WTI crude futures saw a rise of 71 cents, settling at $91.48 per barrel.

The noteworthy catalyst for this surge in oil prices is the collaborative effort of Saudi Arabia and Russia, who announced an extension of combined supply cuts totaling 1.3 million bpd by the end of the year. This commitment to reduce output has contributed significantly to the prevailing supply deficit sentiment.

Contributing to the prevailing optimism in the market is the anticipation of a decrease in oil production within the United States, specifically in key shale-producing regions. According to the U.S. EIA's monthly report, this decline has brought U.S. oil output to its lowest level since May 2023. This expected decline is projected to occur for the third consecutive month, with October being the target period.

Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, emphasized the importance of OPEC+ measures in regulating oil market supply. He stressed that international energy markets require judicious oversight to mitigate volatility. However, Prince Abdulaziz also sounded a note of caution, highlighting uncertainties regarding Chinese demand, European economic growth, and the actions of central banks in addressing inflation concerns.

Both Brent and WTI crude prices have been on an upward trajectory for three consecutive weeks, reaching their highest levels since November. Furthermore, they are on track to record their most substantial quarterly gains since the first quarter of 2022, coinciding with Russia's invasion of Ukraine.

It is worth noting that the Brent benchmark has entered overbought territory for the seventh consecutive session, while WTI has maintained its position in overbought territory for the fifth consecutive session. This indicates that the bullish sentiment in the market has persisted over an extended period.

However, it is not all one-sided, as some profit-taking activity has been observed in the market, according to Dennis Kissler, Senior Vice President of Trading at BOK Financial. This suggests that investors are cautiously assessing the current market conditions, thereby recognizing the potential for price corrections after the recent bullish run.