Oil prices were unchanged on Monday as investors looked towards Chinese economic data to gauge demand recovery in the world’s second-largest oil consumer.
Brent crude oil, dropped 13 cents to $86.18 a barrel, while U.S. West Texas Intermediate crude was at $82.33 a barrel, down 19 cents.
Both crude oils had their fourth consecutive weekly gain last week, the longest such streak since mid-2022.
The International Energy Agency (IEA) predicted that the release of China’s first-quarter gross domestic product (GDP) data would be positive for commodity prices and that it would account for most of 2023 demand growth. The data will be published at 0200 GMT on Tuesday.
However, the IEA cautioned that the output cuts declared by OPEC+ producers could worsen the oil supply deficit anticipated in the second half of the year, endangering consumers and the global economic recovery.
“Crude futures were relatively rangebound as a fresh week began…with the OPEC/non-OPEC output cuts announced a fortnight ago fully baked in,” according to Andana Hari, founder of oil market analysis provider Vanda Insights.
Meanwhile, exports of oil from northern Iraq to the Turkish port of Ceyhan remain at a standstill nearly three weeks after an arbitration case found that Ankara owed Baghdad compensation for unauthorised exports.
As Middle Eastern crude supplies, which meet more than half of Asia’s demand, become more expensive, refiners’ margins are already being squeezed, prompting them to seek supplies from other regions.
In anticipation of peak summer demand, refiners are also increasing gasoline output while reducing diesel production amid worsening margins.
Again, earnings from US firms could provide hints about the Federal Reserve’s policy path and the dollar’s direction. As interest rate hikes strengthen the greenback, dollar-denominated oil becomes more expensive for holders of other currencies.
Traders are predicting that the Fed will raise its lending rate by another quarter of a percentage point in May and have delayed expectations of a rate cut until later this year, as is typical during a slowdown.
Oil prices are expected to remain steady in the short term, with investor focus on Chinese economic data and the Fed’s policy decisions.
