Oil steady as markets weigh OPEC+ surprise cuts amid demand woes
Reuters
Published Apr 03, 2023 09:02PM ET
Updated Apr 04, 2023 04:55PM ET
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices were little changed in choppy trading on Tuesday as investors weighed OPEC+ planned production cuts against weak U.S. and Chinese economic data that could suggest cooling oil demand.
Brent crude futures settled 1 cent higher at $84.94 a barrel, while U.S. West Texas Intermediate (WTI) crude futures closed up 29 cents, or 0.4%, at $80.71 a barrel.
"We will need to see demand hold and grow to push crude into the upper $80's," said Dennis Kissler, senior vice president of trading at BOK Financial.
Brent crude and WTI had jumped by more than 6% on Monday after the Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, rocked markets with an announcement of voluntary production cuts of 1.66 million barrels per day (bpd) from May until the end of 2023.
U.S. job openings in February fell to the lowest level in nearly two years and a slump in U.S. manufacturing activity in March raised concerns about oil demand. Weak manufacturing activity in China last month also added to the woes.
Stock markets declined on the weaker economic data, while gold crossed the key $2,000 level as investors rushed to buy the safe haven asset.
The economic signals ran alongside fears of an inflationary hit to the world economy, as rising oil prices fuel higher interest rates.
OPEC+'s latest output targets bring the total volume of cuts by OPEC+ to 3.66 million bpd, including a 2 million-barrel cut last October, equal to about 3.7% of global demand.
The production curbs led many analysts to raise their Brent oil price forecasts to around $100 per barrel by year-end. Goldman Sachs (NYSE:GS) lifted its forecast for Brent to $95 a barrel by the end of 2023, and to $100 for 2024.
Meanwhile, U.S. crude oil stockpiles drew by more than 4 million barrels last week, according to market sources citing American Petroleum Institute figures on Tuesday. A preliminary Reuters poll had estimated a 2.3 million barrel drop in inventories.
The U.S. Energy Information Administration will release its data at 10:30 a.m. (1430 GMT) on Wednesday.
Market watchers have been trying to gauge how much longer the U.S. Federal Reserve Bank may need to keep raising rates to cool inflation, and whether the U.S. economy may be headed for a recession.
Get The News You Want
Investors now see an about 40% chance the Fed will hike rates by a quarter basis point in May, with a roughly 60% chance of a pause.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.