Oil prices made a notable rebound today following four consecutive days of decline. This uptick came as a result of signs indicating supply tightness, coupled with ongoing output cuts by major producers. Both China and the United States, the world’s largest crude consumers, saw a rise in prices amidst concerns over sluggish demand.
- Brent crude futures climbed by 53 cents, or 0.65 percent, reaching $82.57 a barrel at 0922 GMT.
- US West Texas Intermediate crude futures also saw an increase of 64 cents, or 0.82 percent, hitting $78.79 a barrel after a two-day decline.
China’s recent announcement of an economic growth target of around 5 percent for 2024 did not include substantial stimulus plans to boost its struggling economy. This lack of significant fiscal expansion raised worries about slower oil demand growth. Analyst Tony Sycamore from IG in Sydney noted that the market was hoping for more support to meet the growth target.
Attention is now turning to US Federal Reserve Chair Jerome Powell’s semi-annual monetary policy testimony to Congress, taking place today and tomorrow, as well as Friday’s US employment data. The upcoming US non-farm payrolls data, expected to show an increase of 200,000 jobs in February after a surge of 353,000 in January, will be closely watched.
Market sentiment regarding US interest rates is likely to be influenced by Powell’s comments and the jobs data. A potential Fed rate cut would be viewed as positive for both the economy and oil demand.
The recent extension of output cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to the end of the second quarter has contributed to supply tightness, particularly in Asian markets. Additionally, disruptions in oil tanker movements due to the Red Sea attacks by the Houthi militia in Yemen have further constrained supply.
Saudi Arabia, the world’s top oil exporter, announced slightly higher prices for April crude sales to Asia, its largest market, indicating the impact of these supply constraints.
In terms of inventory, the American Petroleum Institute’s data showed a smaller-than-expected increase in US crude stocks, rising by 423,000 barrels in the week ended March 1, compared to the anticipated 2.1 million barrels from analysts in a Reuters poll.
Investors are now eagerly awaiting the official data from the US Energy Information Administration, scheduled for release later today at 10:30 am ET (1530 GMT). This report will provide further insights into the state of US crude inventories and is expected to have an impact on oil prices in the near term.
