Oil prices rose in Asian trade on Monday, rising after their first negative week in four as the prospect of tighter supplies largely offset concerns over a potential slowdown in demand.
Crude prices had ended last week about 0.8% lower, coming chiefly under pressure from hawkish messaging from the Federal Reserve, as the central bank projected higher for longer interest rates. Strength in the dollar also weighed, as the greenback hit six-month peaks.
But losses were still limited by the prospect of tighter supplies, especially after Russia suspended most fuel exports, in a bid to address rising local gasoline prices.
While Moscow said the move was temporary, it is still expected to substantially tighten oil markets in the coming weeks, given that Russia and Saudi Arabia also cut production by a combined 1.3 million barrels per day for the remainder of the year. The productions cuts sparked an over 15% rally in oil through the past month, and are expected to keep crude trading between $90 and $100 a barrel for the remainder of the year.
Brent oil futures rose 0.3% to $92.22 a barrel, while West Texas Intermediate crude futures rose 0.3% to $90.30 a barrel by 20:19 ET (00:19 GMT). Both contracts fell from a 10-month high last week.
Inflation data awaited, markets on edge over oil-driven spike
Markets were now awaiting a string of key economic readings this week, with inflation data from Singapore, Australia, Germany and Japan on cue this week. The readings, which are for September, come amid growing concerns that rising oil prices could trigger a resurgence in inflation, attracting more hawkish moves by global central banks.
Inflation readings for August from a slew of major economies showed that inflation was once again picking up this year, with fuel prices factoring into higher living costs. The Fed had also expressed concerns over such a scenario during its meeting last week.
In addition to the inflation data, focus this week is also on addresses by several Fed members- most notably Chair Jerome Powell on Friday. Powell is widely expected to reiterate the central bank’s higher-for-longer stance on interest rates, and could offer more insight into the recent resurgence in inflation.
China PMIs on tap as stimulus bets persist
Oil markets also took some support from the prospect of more stimulus measures in China, the world’s largest oil importer, Investing reported.
Reports last week suggested that the country was planning on further loosening laws on foreign investment, while also improving lending and liquidity conditions for the property sector.
Focus this week is chiefly on purchasing managers’ index (PMI) data for September, after PMIs for August showed some signs of improvement, particularly in the managing sector.
