The World Bank has cut…
OPEC's crude oil production increased…
Crude oil futures were trending higher on Monday as hopes of a demand-led recovery seemed to win over growing concerns regarding the health of the global economy, particularly in key economies in the U.S. and Europe.
Brent crude was trading at $82.57/barrel at 12:24 p.m. EST, up 1.11%, compared to Friday's settlement of $81.66/barrel, having tested monthly lows at below $80.50/barrel. Meanwhile, West Texas Intermediate (WTI) was trading at $78.67/barrel, up 1.03%, versus Friday's close of $77.87/barrel.
"Signs that central banks will continue raising interest rates and concerns that this will slow economic growth are hurting the oil demand outlook. Weaker-than-expected regional manufacturing data and signs of weakness seeping into the US labour market are fueling recession worries. At the same time, Federal Reserve officials are calling for further rate hikes,"said City Index analyst Fiona Cincotta has told Quantum Commodity Intelligence.
In its latest commodities report, Saxo Bank said that renewed weakness in the oil markets during the second half of the current month was driven by a combination of soft U.S. economic data along with lower gasoline and diesel margins, both of which point at sluggish fundamentals. Luckily, Saxo believes Brent will hold in the $80s/barrel for the near future, with demand set to pick up during the second half of 2023.
Oil prices have also been finding support as investors increase net long positions on crude and most refined oil products as signs of a tightening oil market compete with concerns over the economic outlook. Last week, money managers added around 9 million barrels of ICE Brent long positions in the week to 18 April, according to the latest exchange data, while short positions increased 2 million barrels.
The growing bullishness is supported by an expected oil supply deficit as OPEC+ production cuts kick in. The oil markets have been oversupplied over the past few months thanks to overall weak demand following warmer than expected weather in Europe. The U.S. crude market started signaling oversupply in November, the first time supply exceeded demand in 2022. Luckily, commodity analysts at Standard Chartered expect the global oversupply to be all but gone by November.
By Alex Kimani for Oilprice.com
More Top Reads From Oilprice.com:
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.