Oil slumped on Monday after rising 2% in the previous session as investors focused on upcoming key US inflation data and short-term demand concerns from refinery maintenance in Asia and the US.
Brent crude futures were down 74 cents, or 0.9%, to $85.65 a barrel as of 0400 GMT, after gaining 2.2% on Friday. West Texas Intermediate crude (WTI) is trading at $78.99 a barrel, down 73 cents, or 0.9%, after rising 2.1% in the previous session.
Crude oil prices have softened as energy traders expect a potentially weakening crude demand outlook as a major inflation report could force the Fed to tighten policy even more aggressively.
Wall Street will give an idea of how the recession is, according to the US consumer price data to be released on February 14 this week.
The US Federal Reserve’s increase in interest rates to rein in inflation raises concerns that this move will slow economic activity and oil demand.
The resumption of Azerbaijani oil exports at Turkey’s Ceyhan terminal on Sunday eased supply concerns. The terminal is the storage and loading point for pipelines carrying oil from Azerbaijan and Iraq, and was damaged in the devastating earthquakes that hit Turkey and Syria last week.
Oil prices rose on Friday after Russia, the world’s third-largest oil producer, announced it would cut its crude output by 500,000 barrels per day (bpd), or about 5%, in March, in response to the export restrictions imposed by the West.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, had agreed in October to cut production by 2 million barrels per day, about 2% of world demand.
The 500,000 bpd cut would bring Russia back into the OPEC+ quota as Moscow is currently over-exporting.
On a weekly basis, both Brent and WTI contracts rose more than 8% last week, bolstered by optimism about the recovery in demand in China, the world’s largest importer of crude oil and the number 2 oil consumer, following the lifting of COVID restrictions.
The recovery in China’s oil demand is reducing gasoline exports in February, while refineries keep diesel shipments above 2 million tons.
OPEC country officials said oil prices could rise to $100 a barrel again this year due to China’s demand recovery, the group’s lack of investment, and limited supply growth.
