Oil Prices Rebound on Softer Inflation Data
The oil market kicked off the week on a positive note, with prices rising on Monday as investors breathed a sigh of relief following lower-than-expected U.S. inflation data. This development has revived hopes for further policy easing, which could boost economic growth and, in turn, oil demand.
Brent and WTI Futures Climb
Brent crude futures rose 0.5% to $73.31 a barrel, while U.S. West Texas Intermediate crude futures climbed 0.6% to $69.86 per barrel. According to IG markets analyst Tony Sycamore, the cooler inflation data helped alleviate concerns following the Federal Reserve’s hawkish rate cut, leading to a firmer footing for risk assets, including U.S. equity futures and crude oil.
Senate Legislation Passage Boosts Sentiment
The passage of legislation to end the brief U.S. government shutdown over the weekend also contributed to the positive sentiment, Sycamore noted. This development has helped to ease concerns about the impact of the shutdown on the economy and oil demand.
Global Economic Growth Concerns Weigh
Despite the rebound, concerns about global economic growth and oil demand continue to weigh on the market. Last week, oil benchmarks fell more than 2% due to concerns about the Federal Reserve’s cautious stance on monetary policy easing. Additionally, research from Sinopec, Asia’s top refiner, pointing to China’s oil consumption peaking in 2027, has also dampened sentiment.
Money Managers Increase Net-Long Positions
In a sign of optimism, money managers raised their net-long U.S. crude futures and options positions in the week to December 17, according to the U.S. Commodity Futures Trading Commission.
European Supply Concerns Ease
Concerns about European supply eased on reports that the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic, and Germany, has restarted after halting due to technical problems at a Russian pumping station. Shipments resumed on Saturday, and Hungarian Foreign Minister Peter Szijjarto confirmed that supplies to the country had restarted.
Trump Urges EU to Increase U.S. Oil Imports
U.S. President Donald Trump on Friday urged the European Union to increase U.S. oil and gas imports or face tariffs on the bloc’s exports. The European Commission responded by expressing its readiness to discuss strengthening its relationship with the U.S., including in the energy sector.
U.S. Oil Rig Count Rises
In the U.S., the number of operating oil rigs increased by one to 483 last week, the highest since September, according to Baker Hughes.
Growing Supply Surplus Projected
Despite the rebound, analysts at Macquarie project a growing supply surplus for next year, which could weigh down Brent prices to an average of $70.50 a barrel, down from this year’s average of $79.64 a barrel.
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