May 13 2024: Oil prices saw an uptick on Monday, bouncing back from mild losses in the previous week as traders assessed mixed Chinese inflation data ahead of crucial U.S. inflation reports scheduled for this week.
By 08:15 ET (12:15 GMT), Brent oil futures surged 0.7% to $83.33 per barrel, while West Texas Intermediate crude futures climbed 0.8% to $78.85 per barrel.
Mixed Chinese Inflation Signals: Chinese inflation data for April, released recently, portrayed a mixed picture. Consumer price index inflation showed a steady recovery, indicating that Beijing’s significant monetary support was aiding consumer spending. However, producer price index inflation continued its decline for the 19th consecutive month, signaling ongoing weakness in factory and business activities in China, the world’s largest crude importer.
Impact of Alberta Wildfire: Adding to the market dynamics, an out-of-control wildfire southwest of Fort McMurray in Alberta prompted an evacuation alert. This news raised concerns about potential disruptions to oil output, reminiscent of the major wildfire event in 2016 that significantly impacted oil production in the region.
OPEC+ Meeting and Supply Concerns: Global oil supply concerns remained in focus ahead of the upcoming OPEC+ meeting in June. Reports suggested that Saudi Arabia might maintain steady crude oil supply levels in July, contrary to earlier expectations of a slight increase. However, Iraq’s stance on further supply cuts remained unclear, raising questions about the group’s collective decision.
US Inflation Data Impact: Oil markets were cautious due to weak U.S. consumer confidence data and concerns about high inflation projections, indicating a potential economic slowdown. The upcoming U.S. inflation readings, particularly the Consumer Price Index (CPI) data scheduled for Wednesday, will be closely watched for signs of cooling inflation. Any easing in inflation could prompt the Federal Reserve to consider interest rate cuts, affecting oil prices amid expectations of subdued economic activity.
Overall, oil markets remain sensitive to global economic trends, supply dynamics, and central bank policies, with inflation data playing a significant role in shaping market sentiment.
(Ambar Warrick contributed to this article.)
