Oil headed for a fourth consecutive monthly decline as concerns over tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China.
(Bloomberg) — Oil headed for a fourth consecutive monthly decline as concerns over tighter monetary policy and swelling stockpiles in the US eclipsed optimism about rising demand in China.
West Texas Intermediate ticked above $76 a barrel, but is still down about 3% this month. Crude has been under pressure in February as persistent inflation in the US spurs expectations that the Federal Reserve will keep raising interest rates. That’s aided the dollar, hurting commodities 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 faltered 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.
“Fundamental developments continue to balance each other out,” said Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen. “But with the Fed hikes priced in and the market underestimating China’s recovery and India’s demand strength, I believe we are gearing up for a bounce — though in a limited range.”
In London, International Energy Week is 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.
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–With assistance from Rob Verdonck.
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