Singapore, April 17 (BNA): Oil prices rose slightly, supported by OPEC + plans to cut more production, while investors monitor Chinese economic data for signs of a recovery in demand by the world’s largest oil consumer.
Brent crude futures rose six cents to $86.37 a barrel by 03:50 GMT, while US West Texas Intermediate crude was $82.56 a barrel, up 4 cents, according to Reuters.
Both contracts posted their fourth weekly gains last week – the longest streak since mid-2022 – after the International Energy Agency (IEA) forecast record 2023 demand of 101.9 million bpd, up 2 million bpd from last year. .
However, the International Energy Agency warned in its monthly report that the production cuts announced by OPEC + producers threaten to exacerbate the expected oil supply deficit in the second half of the year and could harm consumers and the recovery of the global economy.
Rising costs of crude oil supplies in the Middle East, which meets more than half of demand in Asia, have already squeezed refiners’ margins, prompting them to secure supplies from other regions.
Refineries are also ramping up gasoline production ahead of peak summer demand, while cutting diesel production amid deteriorating profit margins.
CMC Markets analyst Tina Ting said investors will be watching the release of China’s first-quarter GDP data this week, which is expected to be positive for commodity prices.
She added that US corporate earnings could provide clues about the path of Federal Reserve policy and the path of the dollar.
The dollar has been strengthening along with interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies.
Traders are betting that the Fed will raise its lending rate in May by another quarter of a percentage point and push expectations for a rate cut into late this year, as it usually does in a slowdown.
Tony Sycamore, an analyst with IG, said the market is pricing in a 78% chance of a 25bp rate hike in May, with less than 60bp of cuts by the end of the year.
He added that this means that some of the tailwinds supporting crude oil demand from expectations of the Fed’s rate cut are starting to fade.
NAA