Oil prices remained steady on Monday as concerns over rising interest rates, the global economy, and the fuel demand outlook were counterbalanced by the potential for tightening supplies. Brent crude saw a slight decrease of 22 cents, or 0.3%, reaching $81.44 a barrel, while U.S. West Texas Intermediate crude dipped 13 cents, or 0.2%, to $77.74.
Weekly Declines in Oil Contracts Due to Reduced Gasoline Demand
Both oil contracts experienced over 5% declines last week, marking their first weekly drops in five weeks. This decrease resulted from the U.S. implied gasoline demand falling compared to a year earlier.
Weak Economic Data and Rising Bond Yields Pressure Commodity Markets
According to CMC Markets analyst Tina Teng, weak U.S. economic data and disappointing corporate earnings in the technology sector have raised growing concerns among investors. The stabilizing U.S. dollar and rising bond yields put pressure on commodity markets.
Anticipated Interest Rate Increases from Central Banks
Central banks in the United States, Britain, and Europe are expected to raise interest rates in the first week of May to combat persistent high inflation.
China's Economic Recovery Impacts Oil Demand Outlook
China's uneven economic recovery following the COVID-19 pandemic has shadowed the oil demand outlook. Despite this, Chinese customs data revealed record crude import volumes in March, with imports from Russia and Saudi Arabia exceeding 2 million barrels per day (bpd) each.
Weaker Refining Margins in Asia Impact Middle East Supplies
Refining margins in Asia have been weakened by record production from leading refiners China and India, which has reduced the region's appetite for Middle East supplies scheduled for June.
Bullish Outlook on China's Fuel Demand and OPEC+ Supply Cuts
Analysts and traders maintain a positive outlook on China's fuel demand recovery in the latter half of 2023 and potential supply tightness due to additional supply cuts planned by the OPEC+ producer group from May. Independent oil analyst Sugandha Sachdeva predicts that Brent will find key support around $79 a barrel, while WTI crude support is aligned at $75.