Oil held on for a slight gain as a weaker demand outlook dampens the impact of OPEC+ production cuts.
U.S. shale output is forecast to rise in May, while the profit margin for producing diesel from a barrel of crude is at its lowest in a year, highlighting the outlook for stronger demand weak Global supplies are also showing signs of growth, as Russia’s crude exports rose above 3 million barrels a day last week, even as Moscow said it had cut output.
The short squeeze precipitated by the surprise production cut is ending, said Dan Ghali, commodities strategist at TD Securities. Algorithmic trend followers who poured into the market during the price rally are nominally supporting the market as the fundamentals turn to the downside.
“We think marginal buying activity in this cohort of WTI crude is stopping the bleeding, keeping prices locked in a tight range,” Ghali said.
Despite the slowdown in crude oil’s recent rally, many market watchers are betting that China’s recovery from Covid-19 restrictions will lead to price gains for the rest of the year. China, which is the world’s largest oil importer, grew its economy at the fastest pace in a year, putting the country on track to meet its growth target.
Investors are also awaiting an economic survey from the Federal Reserve and further comments from officials this week, which will provide insight into the health of the US economy and the likely path of monetary policy.
Prices:
- WTI for May delivery rose 3 cents to settle at $80.86 in New York.
- Brent for June settlement gained a cent to close at $84.77 a barrel.
