Crude oil prices started the day with a gain, rising modestly in Asian morning trade as the market assessed the risk of another rate hike in the United States and the supply limits OPEC+ agreed earlier this month.
That early gain, which may well reverse later in the day, came after the first daily decline in prices after three weekly increases in a row. Reuters attributed the Monday decline to monthly U.S. jobs data released last Friday, which showed hiring was still strong and jobless rates were falling.
This reinforced expectations of more rate hikes by a hawkish Fed, and this, in turn, reinforced suspicions about the future of oil demand. The Fed is releasing the minutes of its March meeting tomorrow.
On the other hand, news about a strong rebound in China travel has served to fuel optimism about demand and, by extension, prices. Airlines in China are on a hiring spree for cabin crews, Reuters reported this week, meaning the air travel industry’s fortunes were reversing after three years of pandemic restrictions.
“Oil is a bit of an oddity today as it extracts some buffer from an interventionist OPEC+,” said Mizuho Bank head of economics and strategy for Asia, Vishnu Varathan, as quoted by Bloomberg.
Oil prices have gained about 5% since OPEC+ announced its latest round of additional cuts, to the tune of 1.16 million barrels daily, distributed among nine cartel members. Russia’s cuts of 500,000 bpd are not included in the above figure.
A lot of oil demand and supply updates are due to be released this week, starting with the EIA’s Short-Term Energy Outlook, due out later today. On Thursday, OPEC is publishing its latest Monthly Oil Market Report, and on Friday, the International Energy Agency will follow with its own Oil Market Report.