Oil Edges Higher With Demand Outlook, Monetary Policy in Focus

Oil opened the week with a gain as investors assessed a complex outlook for global demand after a period of volatile trading.

(Bloomberg) — Oil opened the week with a gain as investors assessed a complex outlook for global demand after a period of volatile trading.

West Texas Intermediate rose toward $72 a barrel after surging by more than 4% on Friday, when futures pared a steep weekly loss during which they touched the lowest since late 2021. While fears of a US recession and bank failures have rattled markets recently, physical demand signals for crude suggest some of the recent weakness in prices may have been overdone.

Traders will get a brace of outlooks this week on how the second half of the year may shape up. On Thursday the Organization of Petroleum Exporting Countries issues its monthly snapshot and, ahead of that, the US Energy Information Administration delivers its short-term outlook on Tuesday. In addition, the world’s largest oil producer, Saudi Aramco, will disclose earnings.

Crude has dropped by more than 10% this year as the US Federal Reserve’s most aggressive tightening campaign in a generation spurred concerns of a US slowdown or recession, although most investors now expect that policymakers will pause rate increases. Crude’s drop has come despite a surprise production cut by OPEC and its allies including Russia. Still, there’s little evidence that Moscow has so far reduced its supply despite a vow to do so.

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