Crude oil prices rise in early trade

17 Apr 2023 , 08:37 AM

Oil prices increased slightly on Monday, helped by OPEC+’s pledges to cut production even more, as investors watched Chinese economic data for indications of a resurgence in demand by the world’s second-largest oil user.

Brent crude futures had edged up 17 cents to $86.48 per barrel, while U.S. West Texas Intermediate crude had gained 14 cents to $82.66 per barrel.

After the International Energy Agency (IEA) predicted record demand in 2023 of 101.9 million barrels per day (bpd), up 2 million bpd from last year, both contracts recorded their fourth weekly advances last week.

The IEA issued a warning in its monthly report, stating that the output reductions planned by OPEC+ countries run the danger of worsening the anticipated shortfall in oil supplies in the second half of the year, which might harm consumers and the ongoing global economic recovery.

The margins of refiners are already being squeezed by the rising costs of Middle Eastern crude supplies, which satisfy more than half of Asia’s demand. This has led them to seek supplies from other areas.

Ahead of the peak summer demand, refiners are also increasing their output of petrol while decreasing their output of diesel due to declining margins.

Nearly three weeks after an arbitration judgment determined Ankara owed Baghdad compensation for unauthorized exports, oil exports from northern Iraq to the Turkish port of Ceyhan are still halted.

This week’s release of China’s first-quarter gross domestic product (GDP) data will be closely watched by investors since it is anticipated to be good news for commodity prices.

The direction of Federal Reserve policy and the trajectory of the currency may both be indicated by the earnings of American businesses.

Oil priced in dollars is now more expensive for owners of other currencies since the dollar has been appreciating in tandem with interest rate increases.

The Fed is expected to increase its lending rate by another quarter point in May, according to traders, who have postponed expectations of a rate decrease, which generally follow a slowdown, until later this year.

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