Oil prices set for modest weekly gain

May 17, 2024 (MLN): Oil prices are on track for a modest weekly gain, with the outlook for supply and inflation in focus.

Brent crude traded near $83.56 per barrel, up over 1.1% this week.

While West Texas Intermediate crude (WTI) was at $78.2 per barrel.

Lower US crude stockpiles, as well as a lift from signs that US inflation could be ebbing, have vied in recent sessions with outlooks for weaker demand growth from groups including the International Energy Agency, as Bloomberg reported.

Price action this week has been muted, as the competing drivers largely offset each other.

That’s resulted in the tightest weekly range — of less than $3 a barrel for Brent — since March. Technical factors are also at play, with prices holding close to the 100-day moving average.

Oil has had few clear drivers this week, with the backdrop “a crossword puzzle of mismatched demand-and-supply forecasts” from OPEC and the IEA, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte.

Also, softer US inflation prints haven’t “eased the ambiguity over pace and timeline of the Fed’s rate-cut trajectory,” she said, referring to the US central bank.

Crude remains higher for the year to date, although futures have declined since April as the geopolitical risk premium that had come from tensions in the Middle East faded.

An OPEC+ meeting on June 01 is widely expected to see the group agree to continue with existing production cuts, with some members seeking to have their acknowledged capacity levels upgraded.

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