Oil prices fell this week ahead of U.S. inflation data and reports from OPEC and the IEA that could provide clues about the demand outlook.
Brent futures were below $82 a barrel after falling 1.1% on Friday, while West Texas Intermediate was below $78. Prices remain within a narrow trading range. Investors are focused on the possibility of higher-than-expected U.S. inflation on Tuesday, which could disrupt the path of monetary policy.
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Oil prices are emerging from their most volatile week since late 2021, as the market swings between competing bulls and bears. OPEC+ production cuts and tensions in the Middle East are being offset by rising supplies from outside the group and persistent concerns about the economic outlook for China, its biggest importer.
Investors are also keeping an eye on ceasefire negotiations between Israel and Hamas, which remain stalled. Israel has threatened to invade the southern Gaza city of Rafah if talks fail, with US President Joe Biden warning that it would be a “red line that should not be crossed”.
“We believe the current price level is about right for the current supply and demand dynamics,” said Hang Zhong Liang, investment strategist at Standard Chartered. “Oil prices are likely to continue trading range-bound unless there is a major change on either side of the equation, such as escalating tensions in the Middle East that have a significant impact on supply.”
The Organization of the Petroleum Exporting Countries is scheduled to release its monthly market report on Tuesday, and the International Energy Agency is expected to release a corresponding outlook on Thursday. The U.S. Energy Information Administration is also scheduled to release its short-term energy outlook this week.
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Meanwhile, Iran's oil exports have reached their highest level since 2018, when former US President Donald Trump abandoned Iran's nuclear deal with world powers and reimposed sanctions, the country's oil minister said.
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