Crude oil prices started the week with a loss as traders await the latest inflation reading from the United States and the market prices in Russia's stated plans to reduce oil production by half a million barrels.
The Bureau of Labor Statistics is releasing its consumer price index report for January tomorrow but a revision of December figures released last Friday showed that CPI for the last month of 2022 actually increased instead of decreasing as initially reported by the BLS.
The January reading is seen by analysts at 0.4 percent, according to a Reuters survey.
On top of worries about U.S. inflation and its effect on oil demand, traders are also bracing for news from the Fed this week.
"Crude prices are softening as energy traders anticipate a potentially weakening crude demand outlook as a pivotal inflation report could force the Fed to tighten policy much more aggressively," senior OANDA analyst Edward Moya told Reuters.
"This week could deliver a make or break moment in how bad of a recession Wall Street prices in."
Meanwhile, Russia's production cut announcement, which contributed to last week's rally in oil prices has run its course, with analysts noting that such a cut was already priced in.
"These cuts do not change our view on the market, given that we were already assuming that Russia would have to reduce supply as a result of the EU ban on oil and refined products. The weakness that we are seeing in prices in early morning trading today likely reflects the market coming to the realization that these cuts are already largely priced in," ING wrote in a note, quoted by Investing.com.
At the time of writing, Brent crude was trading at $85.56 per barrel, and West Texas Intermediate was trading at $78.85 per barrel, both down by about a percentage point from Friday's close.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Though the global oil market reacted immediately to Russia’s decision to cut production by 500,000 barrels a day (b/d) from the start of March. the full effect of the cut will take some time to be fully felt. The cut will exacerbate shortages in the market thus making the market tighter and causing prices to rise. This means that the import bill of those who imposed the cap will be higher.
Moreover, Russia’s production cut isn’t a result of the EU ban on Russian oil and petroleum products as the author claimed wrongly. It is a retaliation against the cap along with a halt of exports to countries that implement it as President Putin decreed.
Brent crude price is expected to hit $90 in the first or second quarters of 2023 and touch $100 during the year.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert
Was on gCaptain anyways.
That could be a very large number none of it accounted for upon any official counting. US demand for *ANYTHING* given Housing market collapse (ongoing) remains at rock bottom lows mega recession levels only made worse by high gasoline and diesel fuel prices and certainly all taken together would explain the *ANNIHILATION* of natural gas futures long traders this Winter (so called.)
Huge and very dangerous here where I am ahem *"warming trend"* ahem en route this week middle of February 2023. By and large a Year without a Winter here in the USA in point of fact.