Oil prices edged up slightly in Asian trading on Monday, stabilizing after three consecutive weeks of declines. Traders are awaiting further cues from upcoming events, including the OPEC meeting and the U.S. Federal Reserve’s policy decision.
Brent crude oil futures for August delivery rose 0.2 percent to $79.77 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.2 percent to $75.38 per barrel by 01:40 GMT. The modest uptick came after crude prices had retreated from four-month lows last week, pressured by a stronger U.S. dollar.
Dollar rebound weighs on oil
The dollar’s rebound was fueled by stronger-than-expected U.S. nonfarm payrolls data, which dampened expectations of an interest rate cut by the Federal Reserve in September. The Fed is set to meet later this week, and any signals regarding future monetary policy will be closely monitored by oil market participants.
Prior to the Fed meeting, Wednesday’s U.S. consumer price index (CPI) report will also be an important data point, as it could influence the central bank’s outlook on inflation and interest rates.
Read more: Oil prices set for third weekly decline on prospects of OPEC+ easing output cuts
OPEC report and demand outlook
Traders are also eagerly awaiting the release of OPEC‘s monthly report on Tuesday. The cartel’s projections for annual oil demand growth will be closely scrutinized, after bearish signals from OPEC and its allies, OPEC+, weighed on prices last week. OPEC+ announced plans to scale back some production cuts later this year, raising concerns about oversupply amid worries of weakening demand.
However, oil prices pared some of their losses after OPEC ministers clarified that they would not increase supply if prices remained depressed. The International Energy Agency is also scheduled to release its own monthly report later this week.
The mixed market signals and upcoming policy events have kept trading volumes relatively muted, with market holidays in China, Australia, and Hong Kong contributing to the subdued activity.
Oil prices plunged on Friday and posted a third straight weekly loss as investors weighed OPEC+ reassurances against the latest United States jobs data that lowered expectations that the Federal Reserve will cut interest rates soon, said Nick Spencer-Skeen, senior executive officer, APM Capital.
Spencer-Skeen added, “Investors have shifted their expectations on Federal Reserve interest rate cuts, now eyeing fewer cuts in 2024 if the central bank lowers rates.”
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