Oil gains for fourth consecutive week
Oil climbs marginally on Monday morning.
A barrel of European reference oil, Brent, nudges to USD 86.36 on Monday morning, up from USD 85.95 Friday afternoon. Simultaneously, the US benchmark West Texas Intermediate climbs from USD 82.32 to USD 82.55 per barrel.
The International Energy Agency (IEA) expects demand to reach 101.9m barrels per day, up 2 million bpd on last year.
In its monthly report, IEA also warns that the announced production cuts from OPEC+ producers could result in a oil supply deficit in the second half of 2023.
Rising costs for Middle East crude, which covers half of Asia’s demand, are already squeezing refinery margins, making them seek out supplies from other regions.
The refineries are ramping up their gasoline output for the summer, while cutting diesel production on weaker margins.
The greenback has been strengthened parallel to interest rate hike. This makes dollar-denominated oil more expensive for holders of other currencies.
”The market is pricing in a 78 percent chance of a 25 basis points (bps) rate hike in May, with fewer than 60bps of cuts priced in by the end of the year,” says IG Market analyst Tony Sycamore to Reuters.
”That means some of the supportive tailwinds for crude oil demand from expectations of Fed rate cuts are starting to fade,” he adds.
English edit: Christian Radich Hoffman
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