Oil market awaits updates on crude supply challenges

Yongchang Chin and Anthony Di Paola, Bloomberg April 10, 2023

(Bloomberg) – Oil steadied as traders assess challenges to crude supply in the wake of planned output cuts by OPEC+ and in anticipation of news on when Iraq may resume exports from its northern fields.

West Texas Intermediate was little changed at about $81 a bbl. The U.S. benchmark rallied almost 7% last week following the surprise decision by the Organization of Petroleum Exporting Countries and its allies that the group would further cut production.

Separately, Turkey wants to negotiate with Iraq a settlement it’s been ordered to pay before a pipeline that exports 400,000 bpd is reopened, according to Turkish officials familiar with the situation.

Crude is coming off three weekly gains, the longest such run this year. While OPEC+’s decision has reignited bullish bets on prices, some demand indicators are showing signs of weakness as slowdown concerns persist. Traders will get valuable insights this week as OPEC and the International Energy Agency are due to release monthly outlooks, while U.S. inflation data and Federal Reserve minutes are also set to be issued.

“Market participants will focus this week on the oil market reports from the energy agencies, which likely show a tighter outlook on lower OPEC+ production,” said Giovanni Staunovo, a commodities analyst at UBS Group AG. “We should see some volatility later today or from tomorrow.”

Russia’s Energy Ministry, meanwhile, said that the nation reduced its oil output by about 700,000 bpd last month, according to a person familiar with the data. Nevertheless, that figure is inconsistent with indicators on the nation’s March seaborne exports and supplies to domestic refineries.

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