LONODN (Reuters) - Oil prices edged higher on Monday, after rising for three straight weeks, as looming supply cuts from Saudi Arabia and other OPEC+ producers offset concern about weakening global growth that may dampen fuel demand.
Crude last week jumped more than 6% after OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, surprised the market with a new round of production cuts starting in May.
Brent crude dropped 68 cents, or 0.76%, to $84.47 a barrel on Monday, while U.S. West Texas Intermediate crude gained 63 cents to $80.07.
“Those who were bearish are questioning the demand outlook in light of the cuts, whilst clearly those who were bullish are now seeing even a tighter market over the second half,” ING’s head of commodities research Warren Patterson said.
Adding to tightness in supply has been a shutdown of Iraq’s northern exports. A deal was signed last week to restart the flows, but as of Thursday they hadn’t resumed.
Oil also drew support from a steeper-than-expected drop in U.S. crude inventories last week, as well as a decline in gasoline and distillate stocks, hinting at rising demand.
In global financial markets, a U.S. inflation report to be released on Wednesday could help investors gauge the near-term trajectory for interest rates.
“This week’s U.S. data could be a drag on sentiment if strong numbers reinforce expectations of the Fed continuing on its tightening path, while weak numbers point to economic pain, which means either way, risk-aversion grows,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Also coming up are monthly reports from OPEC on Thursday and the International Energy Agency on Friday, which will update oil demand and supply forecasts.
Russia’s falling energy revenues may not be able to foot its military bills for long — the country’s just posted an almost $30 billion deficit in the first quarter.
The Kremlin has wildly reversed a 1.13-trillion-ruble, or $14 billion, surplus in the first quarter of 2022, to post a 2.4 trillion ruble quarterly budget deficit this year as the country’s expenditures exceeded its revenues.
Government income declined nearly 21% to 5.7 trillion rubles during the quarter compared to a year ago, per data released by Russia’s finance ministry on Friday. In particular, Russia posted a 45% plunge in energy revenues to 1.64 trillion rubles due to a fall in prices for Russia’s flagship Urals oil grade and a decline in natural gas exports.