Oil ticked lower early Monday as investors returned from a three-day Easter weekend. Crude surged in holiday-shortened trading last week after the Organization of the Petroleum Exporting Countries and its allies announced an unexpected round of production cuts.
Price action
- West Texas Intermediate crude for May delivery CL.1,
-0.12% CL00,-0.12% CLK23,-0.12% fell 39 cents, or 0.5%, to $80.31 a barrel on the New York Mercantile Exchange. - June Brent crude BRN00,
-0.22% BRNM23,-0.22% , the global benchmark, fell 40 cents, or 0.5%, to $84.72 a barrel on ICE Futures Europe. - Back on Nymex, May gasoline RBK23,
-0.44% was down 0.8% at $2.792 a gallon, while May heating oil HOK23,+0.98% edged down 0.1% to $2.656 a gallon. - May natural gas NGK23,
+7.51% jumped 7.2% to $2.155 per million British thermal units.
Market drivers
WTI and Brent each jumped by more than 6% last week, the third straight weekly rise for both grades. Last week’s rally followed the April 2 announcement by Saudi Arabia and OPEC allies of plans to cut output by a collective 1.15 million barrels a day beginning in May through the end of 2023, with Russia pledging to extend a cut of 500,000 barrels a day through year-end.
Upside may be limited by uncertainty over the economic outlook and the Federal Reserve’s next move. Fears of a credit crunch in the wake of last month’s banking woes and continued tightening by the Fed and other central bankers have stirred worries of a steep global slowdown that would undercut crude demand.
“Since we are entering the peak uncertainty phase around the Fed’s next move, with investors debating if credit tightening from financial stress will be enough to warrant cuts or if we are heading for more hikes, so Fed uncertainty could be taking some steam out of very lethargic oil markets today, OPEC’s heavy hand has really tamped down volatility as bulls sit waiting for season demand to pick up and flip the market into a deficit,” Stephen Innex, managing director of SPI Asset Management, said in a note.
