Global oil prices appreciated slightly on Monday during the Asian trading session, following last week’s interest rate cut in the United States and a decline in crude oil inventories.
Brent crude oil, against which Nigerian crude oil is priced, appreciated by 14 cents, or 0.19%, to $74.63 per barrel, while U.S. West Texas Intermediate (WTI) crude oil gained 16 cents, or 0.23%, to $71.16 per barrel.
Both crude oils traded higher last week after the U.S. Federal Reserve cut interest rates by half a percentage point.
“Oil looks rangebound despite the uplift to risky asset prices from an outsized policy rate cut by the Fed last week,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
“The market will look to flash purchasing managers’ index (PMI) releases in Europe and the U.S. for economic direction, and if these disappoint, then there is likely to be downward pressure developing on oil prices.”
In the Euro area, a recent survey showed business activity declined due to stagnant growth in the services industry and a slowing manufacturing sector.
Meanwhile, China’s economic outlook remained subdued with growth continuing to lag.
“There was some hope earlier this morning that additional Chinese monetary stimulus might be likely in the short term, but the latest PMI data out of Europe shifted market sentiment from positive to negative,” said UBS analyst Giovanni Staunovo.
“I would expect oil to benefit this week from a large U.S. crude draw as a result of elevated U.S. crude exports.”
However, heightened conflict in the Middle East could limit regional supply.
The Israeli military launched its most widespread wave of airstrikes against Iran-backed Hezbollah, targeting southern Lebanon, the eastern Bekaa Valley, and the northern region near Syria simultaneously after nearly a year of conflict.
“Geopolitical tensions in the Middle East have edged up between Israel and Hezbollah, which could leave oil prices well supported on the risks of a wider regional conflict,” said IG market strategist Yeap Jun Rong.