Oil Treads Water Ahead of OPEC+ Panel Meeting, PCE Inflation Data2 min read
Oil prices moved little on Friday and were set to end the week flat amid caution over an upcoming OPEC+ panel meeting, as well as more cues on the U.S. economy from a reading on the Federal Reserve’s preferred inflation gauge. Ministers from Algeria, Kuwait, Venezuela, Russia and Oman are set to meet virtually next week as part of a panel called the Joint Ministerial Monitoring Committee (JMMC). The panel can call for a full meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+) and can also decide on crude output from the members of the panel. But Reuters recently reported that the panel is unlikely to alter production levels, given that crude prices recovered sharply in early 2023, and that demand is forecast to surge as the Chinese economy recovers. Brent oil futures rose 0.2% to $87.69 a barrel, while West Texas Intermediate crude futures rose 0.3% to $81.22 a barrel by 20:31 ET (01:31 GMT). Both contracts rose sharply on Thursday following better-than-expected U.S. GDP data, but were set to end the week largely unchanged.
Markets Were Watching For Any Potential Changes In Output By The JMMC.
especially as Russia faces U.S. and European price caps on its fuel exports. But Moscow has so far kept output steady, with China and India remaining major buyers of fuel. Focus next week is also on the U.S. Federal Reserve’s first meeting for 2023, with a majority of traders forecasting that the central bank will hike rates by a relatively smaller 25 basis points. A slowdown or potential stopping in the Fed’s rate hike plans is expected to be positive for crude prices, given that it entails a weaker dollar and lesser pressure on the world’s largest economy. U.S. personal consumption inflation data- the Fed’s preferred inflation gauge-is due later on Friday, and is expected to shed more light on the path of inflation and monetary policy. Crude prices rallied in recent weeks on hopes that an economic recovery in China will drive up demand. The country, which is on a week-long Lunar New Year holiday, relaxed most anti-COVID restrictions earlier this year, and is expected to drive oil demand to a record high this year. But given that China is still facing its worst yet COVID-19 outbreak, markets remain uncertain over the timing of such a recovery.