- Upcoming – The US Energy Information Administration’s Short-Term Energy Outlook on Tuesday
- Upcoming – US API Crude Storage data on Tuesday
- Upcoming – US EIA Crude Storage data on Wednesday
- Upcoming – Chinese trade data for May on Wednesday
NEW YORK (Reuters) – Oil prices were little changed on Tuesday, after erasing earlier losses, as fears of slowing global economic growth that could slash energy demand offset Saudi Arabia’s pledge to deepen production cuts.
Brent crude futures were unchanged at $76.71 a barrel at 11:18 AM ET (1518 GMT), while US West Texas Intermediate crude was up 12 cents, or 0.2%, at $72.27.
Earlier in the session, WTI was down $2 a barrel and Brent was down almost $2.
Rising interest in energy trading in recent weeks boosted open interest in West Texas Intermediate crude futures on the New York Mercantile Exchange (NYMEX) to its highest level since March 2022 for the fourth consecutive day on Monday.
Brent rose as much as $2.60 a barrel on Monday and WTI by as much as $3.30 after Saudi Arabia, the world’s largest exporter, said over the weekend that its output would drop by 1 million bpd to 9 million bpd in July.
But weaker demand, stronger non-OPEC supply, slower economic growth in China and potential recessions in the United States and Europe mean that the Saudi cut is unlikely to deliver “sustainable price increases” in the high 80s and low 90s, Citi analysts said. In a note on Tuesday.
Meanwhile, the US dollar rose to its highest level against a basket of currencies since hitting a 10-week high on May 31 as investors waited for fresh signals about whether the US Federal Reserve will raise or suspend interest rates in June.
A strong dollar can affect oil demand by making fuel more expensive for holders of other currencies.
One such signal came from the US services sector, which barely grew in May as new orders slowed.
“The market remains focused on demand risks, with recession fears heightened by a widespread failure in the US services PMI, clearing the way for the Fed to stall interest rates,” said Ole Hansen, head of commodity strategy. at Saxo Bank.
Higher interest rates boost borrowing costs, which can slow the economy and reduce demand for oil.
The mood was further dampened by data showing that German industrial orders fell unexpectedly in April.
Tamas Varga of brokerage PVM said: “If upcoming economic data points to entrenched inflationary pressures and investors bet on further interest rate increases, demand forecasts could be revised downward, effectively neutralizing the ostensibly bullish impact of the recent production decision (OPEC). +)”.
Looking ahead, the market is waiting for this week’s data from the US and China which could provide new demand indicators in the world’s two largest oil consumers.
China, the second largest oil consumer, will release its trade data for May on Wednesday.
The US Energy Information Administration (EIA) will release its short-term energy outlook at around 12pm EST on Tuesday, which will be followed by US oil inventory data from the American Petroleum Institute (API), an industry group, at 4:30pm. EDT.
The Energy Information Administration will release US oil inventory data at 10:30 AM EST on Wednesday.
Analysts expected that US energy companies added about 1.5 million barrels of crude to storage during the week ending June 2, according to a Reuters poll. And
This would be the second consecutive weekly increase compared to an increase of 2.0 million barrels in the same week last year and a five-year average increase (2018-2022) of 2.3 million barrels.
Additional reporting by Scott DiSavino in New York Additional reporting by Rowena Edwards in London and Arathi Somasekhar in Houston and Trixie Yap in Singapore Editing by David Goodman and Matthew Lewis
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