Oil was on its way to a fourth monthly loss in a row as worries about tighter monetary policy and growing stocks in the United States overshadowed optimism about rising demand in the world’s largest oil consumer, China.
The price of a barrel of West Texas Intermediate crude oil rose briefly beyond $76 but is still down more than 3% for the month. In February, the price of crude fell due to rising predictions that the Federal Reserve will continue to raise interest rates due to indicators of persistent inflation in the United States. Because of this, the value of the dollar has increased, which is bad news for consumers of goods priced in the currency.
The expanding inventories in the United States have also contributed to the decline in the price of oil, which is currently at its highest level since May of 2021. As a component of this rise, there have been builds in oil holdings at the primary storage hub in Cushing, Oklahoma, which is located in the state of Oklahoma.
In 2023, the price of crude fell, despite China’s speedy recovery from the Covid Zero disaster and a variety of indicators indicating an increase in the country’s energy consumption. On Monday, Vitol Group predicted that the demand for oil around the world could set a new high later this year. Traders are also monitoring Russian exports in the midst of the conflict in Ukraine, as Moscow has pledged to restrict output in March in response to the tightening of western sanctions.
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Said Charu Chanana-
“High-frequency data out of China continue to show improvement in mobility levels, but more concrete signs of a pickup in activity are awaited”
Senior market strategist at Saxo Capital Markets Pte. Prices are stuck in a range after taking a hit following US inflation data last week, she added.
The International Energy Week kicks off in London this week, and as a major industry meeting, it is sure to give a steady supply of insights into the currently complex combination of market factors. Among the speakers who are expected to take the stage on Tuesday is Bernard Looney, who serves as the chief executive officer of BP Plc.
While the price of crude has struggled to gather traction thus far in 2018, numerous financial institutions have been reducing their price estimates. Among the most recent, Bank of America Corporation decreased its outlook for Brent to $88 per barrel in 2023 from $100 per barrel. The company cited stable Russian production and a weaker-than-expected start to the year as the reasons for the reduction.
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