Oil prices have steadied on Monday after rising for three straight weeks, with the looming supply cuts from Saudi Arabia and other OPEC+ producers balancing concerns about weakening global growth that may dampen fuel demand.
Crude prices had surged more than 6% last week after OPEC+ surprised the market with a new round of production cuts starting in May.
Brent crude oil, against which Nigerian oil is priced, rose 18 cents to $85.30 a barrel on Monday, while U.S. West Texas Intermediate crude gained 11 cents to $80.81.
Despite concerns about global growth and dampened fuel demand, the market is seeing a tighter oil supply over the second half, said Warren Patterson, ING’s head of commodities research. He believes that prices will continue to move higher throughout the year.
The shutdown of Iraq’s northern exports has also contributed to tightness in supply. While a deal was signed last week to restart the flows, they hadn’t resumed as of Thursday.
Investors King checks showed oil prices drew further support from a steeper-than-expected drop in U.S. crude inventories last week, hinting at rising demand.
Investors are keeping an eye on this week’s U.S. inflation report, which could affect the near-term trajectory for interest rates. Strong numbers could reinforce expectations of the Fed continuing on its tightening path, while weak numbers could point to economic pain and lead to risk-aversion.
Monthly reports from OPEC on Thursday and the International Energy Agency on Friday will update oil demand and supply forecasts.