On Monday, investors were closely monitoring Chinese economic data to gauge the recovery in demand from the world’s second-largest oil consumer, causing oil prices to remain unchanged.
Brent crude futures dropped slightly by 7 cents to $86.24 per barrel at 0746 GMT, while U.S. West Texas Intermediate crude was down by 6 cents to $82.47 per barrel. Last week, both contracts recorded their fourth consecutive weekly gain, the longest winning streak since mid-2022.
The upcoming release of China’s first-quarter gross domestic product (GDP) data is anticipated to have a positive impact on commodity prices. The International Energy Agency (IEA) predicts that the data will account for most of the 2023 demand growth.
however, the IEA also cautioned that output cuts made by OPEC+ producers may exacerbate the anticipated oil supply deficit in the second half of the year, potentially harming consumers and global economic recovery. In addition, exports of oil from northern Iraq to the Turkish port of Ceyhan are still suspended after an arbitration case ruled that Ankara owed Baghdad compensation for unauthorized exports.
Middle East crude supply costs, which meet over half of Asia’s demand, are already pressuring refiners’ margins, prompting them to obtain supplies from other regions. As summer approaches, refiners are increasing gasoline output and decreasing diesel production to counterbalance the margin’s deterioration.
Finally, market participants are watching U.S. corporate earnings to discern the Federal Reserve’s policy path and the dollar’s direction. The dollar has been gaining strength as interest rates increase, making oil priced in dollars more expensive for non-dollar holders.
Traders are currently predicting that the Fed will raise its lending rate by a quarter of a percentage point in May and have pushed back expectations for a rate cut until later in the year, which usually happens during an economic slowdown.
