Oil prices remained flat on Monday as investors evaluated the likelihood of tighter supply from OPEC+ producers in May against concerns about slowing global growth that may reduce fuel consumption.
Brent crude futures fell 7 cents to $85.05 a barrel by 0630 GMT, while WTI crude fell 3 cents to $80.67.
Although the Organization of the Petroleum Exporting Countries and their allies stunned investors by announcing fresh production cutbacks in May, both futures increased for a third week, returning to November levels.
OPEC+ will reduce the Middle East sour crude supply headed by Saudi Arabia.
The world’s largest oil exporter boosted May crude prices to Asian and U.S. consumers after the news. Notwithstanding the output drop, Saudi Aramco has assured many Asian clients of full contract levels in May.
“Those who were negative are doubting the demand picture in light of the cutbacks, whereas certainly those who were optimistic are now expecting even a tighter market during the second half,” said ING’s commodities research head Warren Patterson.
“I’m in the latter group and expect prices to rise throughout the year.”
Investors are also following Iraq-Kurdistan efforts to restore northern oil shipments, which might increase sour crude supply.
A Thursday’s Baker Hughes Co (BKR.O) report showed that U.S. oil rigs decreased by two to 590 last week, and gas rigs declined by two to 158, indicating that output won’t rise soon.
This week’s U.S. inflation data may assist global investors in predicting interest rate trends.
Analysts warned that the Federal Reserve might pause rate rises if inflation stays high.
Vandana Hari, the founder of oil market analysis provider Vanda Insights, said, “This week’s U.S. data could be a drag on sentiment if strong numbers reinforce expectations of the Fed continuing on its tightening path, while weak numbers point to economic pain, which means either way, risk-aversion grows.”
Investors in other currencies pay more for dollar-denominated commodities like oil due to sharp rate rises.
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