Oil rose above $81 a barrel to kick off a week of agency reports that promise to shed light on supply and demand trends following the announcement of surprise OPEC+ production cuts.
(Bloomberg) — Oil rose above $81 a barrel to kick off a week of agency reports that promise to shed light on supply and demand trends following the announcement of surprise OPEC+ production cuts.
Crude held its gains after a US Energy Information Administration report Tuesday estimated only a slight increase in US production compared with previous forecasts. The Organization of Petroleum Exporting Countries and the International Energy Agency also are scheduled to issue monthly reports later this week.
“Energy traders are trying to get a sense of how much crude demand is going to return from China and how much of a slowdown is getting priced in from the US,” said Ed Moya, a senior market analyst at Oanda.
Key market metrics are signaling renewed strength after OPEC+ announced its output cuts. The December-December spread — the difference between futures for the final month of this year and in 2024 — rallied to more than $5 a barrel, up from $2.53 three weeks ago.
Russia’s seaborne oil exports collapsed last week, which could tighten markets further. Almost half a million barrels a day of crude supply from Iraq’s semi-autonomous Kurdistan region also remains halted, and there are signs more negotiations will be needed before those flows can resume.
The Kurdish halt is contributing to UBS Group AG’s forecast that oil prices will rise toward $100 a barrel over the next few quarters. Citigroup Inc., on the other hand, sees prices falling below $80 because China’s recovery has been slower than expected, while the prospect of economic slowdowns in the West is hampering demand.
Read More: Citi Sees Crude Weakening Despite OPEC Output Cuts
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