On Monday, the standard oil price remained steady, maintaining its position above $90 a barrel, a level not seen in the last 10 months. This surge was influenced by recent reductions in crude output from Saudi Arabia and Russia.
Both nations confirmed last week their decision to prolong voluntary cuts, amounting to a combined 1.3 million barrels per day (bpd), through the end of the year.
Despite these cuts, concerns persist about the state of China’s economy. U.S. Deputy Treasury Secretary, Wally Adeyemo, commented on Monday that the economic challenges faced by China are likely to predominantly impact local regions rather than the U.S.
Potential disruptions in crude supply are on the horizon due to severe storms and floods in eastern Libya. Since Saturday, these natural disasters have claimed 150 lives and resulted in the shutdown of four primary oil export ports: Ras Lanuf, Zueitina, Brega, and Es Sidra.
Concurrently, Europe anticipates a milder refinery maintenance period this fall. Refiners aim to benefit from high margins, potentially bolstering crude demand. Consultancy firm Wood Mackenzie estimates that Europe’s offline refinery capacity stands at approximately 800,000 bpd, marking a 40% decline year-over-year.
On Monday by 1411 GMT, Brent crude increased by 19 cents, amounting to a 0.21% rise, settling at $90.84 a barrel. Conversely, U.S. West Texas Intermediate crude saw a minor drop of 2 cents, or 0.02%, standing at $87.49.
Upcoming macroeconomic data set to be released this week will shed light on whether central banks in both Europe and the U.S. will maintain their assertive rate hike trajectories.
The data for the U.S. Consumer Price Index (CPI) for August is scheduled for release on Wednesday, and this could hint at potential further hikes in interest rates.
Naeem Aslam from Zaye Capital Markets suggests that the upcoming inflation data will likely sway various market sectors, ranging from stocks and foreign exchange to fixed income and commodities.
This week also anticipates an interest rate decision from the European Central Bank. On a related note, the European Commission, on Monday, projected a more modest growth rate for the eurozone in 2023 and 2024 than earlier estimates.
Another focal point includes forthcoming monthly reports from the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) expected later in the week.
In its previous report, the IEA downgraded its 2024 oil demand growth prediction to 1 million bpd due to subdued macroeconomic situations. In contrast, OPEC’s report from August retained its 2.25 million bpd growth forecast for demand without any revisions.
