Crude oil prices are likely to end the week with an overall decline despite a rebound late in the week fueled by anticipation of deeper-than-expected Russian production cuts.
The change in sentiment followed a Reuters report that said Russia would be cutting the volumes of oil it exports via its western ports in March and April by as much as 25 percent. That was on top of a planned production cut of 500,000 bpd for March, announced by Deputy Prime Minister Alexander Novak earlier this month.
The report pushed oil prices higher on Thursday, offsetting yet another large crude oil build in the United States as reported by the Energy Information Administration. Prices continued trending higher in midmorning trade in Asia today, too, with Brent crude climbing closer to $83 per barrel and WTI at $76.
The rebound follows a drop to the lowest level in two weeks on Wednesday, when fears that the Fed will continue with its aggressive approach to inflation control weighed on benchmarks.
There still remains plenty to be bullish about. Morgan Stanley earlier this week revised its oil demand forecast for the year, forecasting Chinese demand to climb at a faster rate than previously expected. Meanwhile, the CEO of Pioneer Natural Resources expects Brent to reach $100 per barrel this year.
Yet rate hike prospects and the string of consistent weekly builds in U.S. crude oil inventories are limiting the upside potential of prices. Also, more signs of China's return to business as usual will be needed for prices to pick up more strongly.
"The focus as we close the week will be on what happens with next inflation report, will the market get more nervous on even more tightening from the Fed," Oanda analyst Edward Moya told Reuters.
"A more convincing pickup in Chinese activity is needed to lift oil higher," another analyst, Charu Chanana from Saxo Capital Markets, told Bloomberg.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Russia Discovers Massive Oil and Gas Reserves in British Antarctic Territory
Five Countries With the Cleanest Energy Grid Globally
Aramco’s Q1 2024 Results: Saudi Arabia is at a Dangerous Tipping Point
U.S. Leverages Saudi-Israeli Relations to Isolate Iran
Russia Targets Kharkiv in Major Offensive After Kyiv Attacks Refineries