Brent oil futures saw a modest pullback after an impressive streak of gains, dropping by 0.28% to reach $94.05 per barrel. West Texas Intermediate crude futures traded at $90.22 per barrel. The September WTI contract had settled at $90.77 per barrel on the previous Friday.

In Asian trade on Monday, oil prices experienced a slight decline as traders adopted a cautious stance in anticipation of several significant central bank meetings scheduled for the week. However, the prospect of a tighter market due to additional supply cuts helped maintain prices at their highest levels in ten months.

Both oil contracts remained in close proximity to their peak levels since November 2022, having surged by over 30% in the past three months due to supply cuts initiated by Saudi Arabia and Russia. These two countries recently announced an extension of their 1.3 million barrels per day cuts until the end of the year, underscoring a tight outlook for oil markets.

However, on Monday, oil prices experienced some profit-taking as traders sought to secure their gains. Additionally, concerns about a potential U.S. government shutdown emerged, driven by disagreements among high-ranking Republican lawmakers regarding defense spending.

U.S. lawmakers face a two-week deadline to vote on a fiscal spending bill, the failure of which could lead to significant parts of the government ceasing operations.

The spotlight this week is on a two-day Federal Reserve meeting commencing on Tuesday, which headlines a series of central bank meetings. Although the Fed is widely expected to maintain its current interest rates, it is likely to uphold its hawkish stance, particularly in light of recent inflationary trends.

Expectations for sustained higher U.S. interest rates imply added pressure on the U.S. economy, causing concerns among traders that it could dampen its demand for oil, especially as the summer season draws to a close.

The outcome of the Fed meeting is also expected to influence the trajectory of the U.S. dollar, which was trading close to a six-month high on Monday. Further strengthening of the dollar could exert downward pressure on oil markets.

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