Oil prices settle lower ahead of US Inflation, OPEC crude outlook
Investing.com— Oil prices settled lower Monday, extending losses from the prior week as investors looked ahead to key U.S. inflation data and a fresh updates on the global supply and demand outlook for oil due this week.
By 14:30 ET (18.30 GMT), the U.S. crude futures fell 0.1% to settle at $77.93 a barrel and the Brent contract rsoe 0.3% to $82.32 a barrel.
OPEC, EIA to provide fresh crude outlook
Monthly reports from OPEC, and and International Energy Agency slated for Tuesday and Thursday, respectively, will provide an updated outlook on the global crude demand and supply at time when many continue to fret over sluggish demand.
In its most report in January, OPEC kept its forecast for strong demand, estimating that global oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. That was in contrast somewhat to the IEA’s report, forecasting that demand is likely to slow.
The update come just as OPEC and its allies, or OPEC+, agreed to extend voluntarily cuts of about 2.2 million barrels per day in Q2.
The outlook on demand will also be shaped by expectations about global rate cuts, with a slew of data this week likely to influence the Fed’s thinking ahead of its monetary policy this month.
US CPI data, OPEC monthly report awaited
A key U.S. consumer price index inflation report due on Tuesday is set to offer more cues on the path of interest rates.
Federal Reserve officials had warned last week that inflation will largely determine when the central bank begins trimming interest rates in 2024. The warning, coupled with a stronger-than-expected nonfarm payrolls reading for February, kept markets on edge over higher-for-longer U.S. interest rates.
Tuesday’s CPI reading is expected to show that inflation remained well above the Fed’s 2% annual target, giving the bank little immediate impetus to cut interest rates.
Reduced interest rates are expected to boost economic activity in the world’s largest energy consumer, likely boosting demand for crude.
Supply still seen tight this year
Concerns over sluggish demand from the biggest crude importer in the world have largely offset market expectations for tighter supplies this year, even after the Organization of Petroleum Exporting Countries said it will maintain its current pace of production cuts.
With OPEC+ extending its voluntary production cut agreement until the end of Q2 2024, this could tighten the market as demand recovers from its seasonal lull.
Disruptions in the Middle East are also expected to persist, as talks over an Israel-Hamas ceasefire fell through.
Saudi Aramco (TADAWUL:2222) is planning to reduce its supply of Arab heavy crude to term customers in Asia starting in April due to oilfield maintenance, while weekly data from Baker Hughes shows that the U.S. oil rigs rose by just two rigs over the last week, with the total oil rig count increasing to 504 for the week ending March 8.
(Peter Nurse, Ambar Warrick contributed to this article.)
