Oil prices remained stable on Monday, as concerns about increasing interest rates, global economic conditions, and fuel demand forecasts were counterbalanced by the potential for reduced supply.
Brent crude experienced a minor decrease of 22 cents, or 0.3%, settling at $81.44 per barrel by 1135 GMT. U.S. West Texas Intermediate crude dropped by 13 cents, or 0.2%, to $77.74 per barrel.
Both contracts saw over 5% declines last week, marking their first weekly drop in five weeks, as U.S. implied gasoline demand decreased compared to the previous year.
Subpar U.S. economic indicators and disappointing technology sector corporate earnings raised growth concerns for investors, according to CMC Markets analyst Tina Teng. She also noted that a stabilizing U.S. dollar and rising bond yields are exerting pressure on commodity markets.
Central banks in the United States, Britain, and Europe are all anticipated to increase interest rates during their meetings in the first week of May in an effort to address persistent high inflation.
China’s uneven economic rebound following the COVID-19 pandemic is also creating uncertainty in oil demand forecasts. However, Chinese customs data released on Friday showed that the world’s largest crude importer set a new record for imports in March. China’s imports from top suppliers Russia and Saudi Arabia exceeded 2 million barrels per day (bpd) each.
Simultaneously, refining margins in Asia have been negatively affected by record production levels in China and India, which has diminished the region’s demand for Middle East supplies set to load in June.
Nevertheless, analysts and traders remain optimistic about China’s fuel demand recovery in the latter half of 2023 and potential supply constraints due to OPEC+’s planned production cuts starting in May.
Independent oil analyst Sugandha Sachdeva said, “Planned output cuts by the OPEC+ alliance and a strong demand outlook from China could provide a boost to prices in the coming days.”
She added that Brent crude is likely to find significant support around $79 per barrel, while WTI crude’s support level is expected to be around $75 per barrel.