Oil stayed in a narrow range on Monday, but investors were still smarting after three weeks of declines due to worries about weakening demand and economic growth. Investors’ attention has shifted to important economic data releases from the United States and China this week.
Over the past three weeks, oil prices have dropped to 15-month lows due to worries about a recession and banking crisis in the United States, increasing interest rates, and weak demand in China. Friday’s gains were helped by signs that the U.S. economy is more resilient than previously thought, according to stronger-than-expected nonfarm payrolls statistics.
Crude prices have risen beyond $70 per barrel again, though further rises are unlikely.
As of 21:07 ET (01:07 GMT), the price of a barrel of Brent crude oil was unchanged at $75.36, while the price of a barrel of West Texas Intermediate crude climbed by 0.1% to $71.44. The previous week saw a drop of between 5% and 7% in both contracts.
Now that interest rates have been raised dramatically, all eyes are on Wednesday’s U.S. consumer price index inflation statistics to see if inflation has moderated further. Inflation is predicted to have declined somewhat through April, but to remain far above the Fed’s 2% annual objective.
China is the world’s largest importer of oil, so Tuesday’s trade data is likely to shed further light on the country’s commodities purchases. There have been some encouraging signals of a post-COVID economic rebound in China, but total imports from China are forecast to fall further in April.
Weak pricing pressures are projected to persist in China, according to inflation data that is also coming on Wednesday as the economy attempts to shore up spending and investment.
Oil markets are doubting that a rebound in China would be enough to boost oil demand to new highs this year after receiving weaker-than-expected GDP indicators, especially from the manufacturing sector.
Due to this theory and indications of worsening U.S. economic prospects, crude prices have dropped significantly over the past three weeks, partly offsetting the initial lift from an unanticipated production reduction by OPEC.
Oil supplies are expected to tighten beginning in May due to an OPEC reduction, which may provide near-term support for prices.