Oil headed for a fourth straight monthly drop as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in top importer China.
(Bloomberg) — Oil headed for a fourth straight monthly drop as concerns about tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in top importer China.
West Texas Intermediate was steady near $76 a barrel, and is down almost 4% this month. Crude has been burdened in February as signs of sticky inflation in the US have spurred expectations the Federal Reserve will go on raising rates. That’s aided the dollar, hurting commodities that are priced in the currency.
Oil prices have also been weighed down by rising US stockpiles, which are at the highest level since May 2021. As part of that increase, there have been builds in crude holdings at the key storage hub in Cushing, Oklahoma.
Crude has softened in 2023 despite China’s rapid reemergence from Covid Zero and a host of signs the nation’s energy consumption is picking up. Vitol Group said on Monday that global oil demand may hit a record later this year. Traders are also tracking Russian exports amid the war in Ukraine, with Moscow pledging to reduce output in March as western sanctions tighten.
“High-frequency data out of China continue to show improvement in mobility levels, but more concrete signs of a pickup in activity are awaited,” said Charu Chanana, senior market strategist at Saxo Capital Markets Pte. Prices are stuck in a range after taking a hit following US inflation data last week, she added.
In London this week, International Energy Week gets under way, with the major industry gathering likely to provide a stream on insights into the current, complex set of market drivers. The speakers on Tuesday are scheduled to include Bernard Looney, chief executive officer of BP Plc.
With crude so far failing to gain traction this year, many banks have been scaling back their price forecasts. Among the latest, Bank of America Corp. reduced its 2023 outlook for Brent to $88 a barrel from $100 a barrel, citing resilient Russian production and a weaker-than-expected start to the year.
Elements, Bloomberg’s daily energy and commodities newsletter, is now available. Sign up here.
–With assistance from Rob Verdonck.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.