By Reuters
Oil prices turned lower on Monday as investors mulled over a possible May interest rate hike by the U.S. Federal Reserve, which could dampen economic recovery hopes, though Chinese GDP data was expected to augur well for demand growth.
Brent crude futures were down 55 cents or 0.6% at $85.76 a barrel at 1240 GMT, while U.S. West Texas Intermediate crude was at $81.92 a barrel, down 60 cents or 0.6%.
Both contracts notched their fourth weekly gain in a row last week, the longest such streak since mid-2022.
“Crude futures were relatively rangebound as a fresh week began with the OPEC/non-OPEC output cuts announced a fortnight ago fully baked in”, Vandana Hari, founder of oil market analysis provider Vanda Insights, said.
“The oil complex continues to digest ongoing signs of a U.S. economic cool-down.”
Earnings from U.S. companies could also provide clues for the Fed’s policy path and the dollar’s trajectory.
The greenback has been strengthening alongside interest rate hikes, making dollar-denominated oil more expensive for holders of other currencies.
Traders are betting the Fed will raise its lending rate in May by another quarter of a percentage point and have pushed out to late this year expectations of a rate cut, as typically occurs in a slowdown.
The release of China’s first-quarter gross domestic product (GDP) data at 0200 GMT on Tuesday is meanwhile expected to be positive for commodity prices, with the International Energy Agency (IEA) forecasting it will account for most of 2023 demand growth.
However, the IEA also warned in its monthly report that output cuts announced by OPEC+ producers risked exacerbating an oil supply deficit expected in the second half of this year and could hurt consumers and a global economic recovery.
Further tightening supplies, oil exports from northern Iraq to the Turkish port of Ceyhan remain at a standstill almost three weeks after an arbitration case ruled Ankara owed Baghdad compensation for unauthorised exports.