Oil futures: Brent above $85/b as OPEC+ cuts counter GDP growth concerns
Quantum Commodity Intelligence – Crude oil futures Tuesday climbed g higher as demand optimism and last week's announced OPEC+ cuts countered ongoing fears over economic slowdown in the West.
June ICE Brent futures were trading at $85.57/b (1935 GMT) compared to the day's range of $83.75-$85.67/b and Monday's settle of $84.18/b.
At the same time, May23 NYMEX WTI was trading $81.45/b versus Monday's close of $79.74/b.
"WTI oil prices are getting used to oil in the eighty-handle supported by coming OPEC production cuts as well as rising geopolitical risk," said Phil Flynn of The Price Futures Group, noting China's tensions with Taiwan and the ongoing Russian war in Ukraine.
Traders continued to assess the impact of combined OPEC+ cuts of around 1.15 million bpd announced last week and starting from May, which came on top of Russia's confirmation it will maintain its own 500,000 bpd cuts for the rest of 2023.
However, recessionary fears and the potential for higher global output continued to weigh on sentiment.
"The market has changed from a point of massive oversupply in our judgment to one of market tightness, but still with the risks to the downside," Citi's Ed Morse told Bloomberg TV.
"We won't have the underlying fundamentals of a price crash but we think prices could go down much below the preferred OPEC+ price of $80/b, to $70/b and even touch below that," added Morse.
US rates
The rebound in the Dollar Index early this week had also dampened sentiment with talk of further US rate hikes back on the cards, although the Dollar dollar retreated to around 102.25 points on Tuesday, versus 102.50 in the previous session.
Further clues on the state of the global economy should come from his week's Spring meeting of the World Bank and IMF.
The IMF said it sees global GDP expanding 2.8% this year and 3% in 2024, each down 0.1% from the previous forecast in January. That also compares with a 3.4% expansion in 2022.
However, oil markets shrugged off the IMF report which conceded the global economy faces a "rocky" recovery as geopolitics, monetary tightening and inflation continue to weigh on growth.
Other key data due this week includes the release of US inflation and retail sales data on Wednesday. Headline CPI is expected to drop to 5.1% y/y in March from 6% y/y in February, according to National Bank of Dubai research.
Monthly outlook reports from OPEC and the IEA are also published this week.
