Oil Market Outlook
Oil prices were little changed last week as investors assessed more signs of tightening global supply and improving demand. Prices were supported by data showing Saudi crude exports fell in January for a second straight month, while Iraq confirmed production cuts exceeding 100,000 bpd after it had exceeded its agreed quotas earlier.
US economic indicators remain strong, with new home construction in February up nearly 12% from a year earlier. US crude inventories to March 15 decreased by 2 million barrels, compared with a forecast of 900,000 barrels.
West Texas Intermediate crude fell 41 cents to close at $80.63 per barrel. Brent rose 9 cents to $85.43 and Dubai crude averaged $85.05. Thaioil forecasts that WTI this week will trade between $75 and $85, and Brent between $80 and $90. Prices are expected to remain volatile as traders monitor the conflict in Gaza and attacks by Ukraine on Russian oil infrastructure. An improving outlook in China could also support prices. Among the factors expected to influence trade:
■ Ukrainian drone attacks have affected 1.2 million bpd or 18% of total Russian refinery output. However, Reuters estimates that short-term crude exports by Moscow are expected to rise by 200,000 bpd to 2.15 million bpd this month.
■ Israel insists it won’t be deterred from attacking the southern Gaza city of Rafah in an attempt to rout Hamas. Qatar, Egypt and the US, meanwhile, are still trying to narrow differences between Israel and Hamas over what a ceasefire would look like amid the deepening humanitarian crisis in Gaza.
■ China’s economy is reviving, with February retail sales rising 5.5%, higher than the 5.2% predicted, while industrial production rose 7% versus forecasts of 5.3%, and fixed asset investment increased 4.2%, which could lead to a pickup in oil demand.
■ EU inflation shows clear signs of slowing down, reaching a three-month low of 2.6% year-on-year in February. UK inflation also fell to 3.4% from 4% and is now at its lowest since September 2021. The Bank of England and European Central Bank have both signalled that interest-rate cuts are becoming more likely.
■ The latest survey of US Federal Reserve policymakers shows a majority expect three interest-rate cuts of 25 basis points each before the end of this year. That would bring the benchmark to a range of 3.75% to 4%, still higher than market expectations, which could exert pressure on economic performance and oil demand.
■ Economic i ndicators to watch i nclude US revised fourth-quarter GDP and February durable goods orders.