Crude oil prices showed signs of recovery this week following a significant selloff. Traders have taken a moment to reassess the market, and a developing weather system in the Gulf of Mexico, which could potentially become a hurricane, is contributing to the price movement.
Market Updates
By midmorning trade in Asia, Brent crude had increased by over 1% from last Friday’s closing price, while West Texas Intermediate (WTI) had risen by approximately 1.30% compared to the previous week. This uptick follows a sharp decline of about 10% last week, a downturn described by Bloomberg as “brutal.”
Economic Concerns and Market Reactions
ANZ analysts highlighted that crude oil experienced its most significant weekly drop in 11 months, driven by a deteriorating economic outlook. The latest U.S. jobs data, released on Friday, revealed that only 142,000 new jobs were added in August, falling short of expectations. Despite this, the unemployment rate increased less than anticipated, which has kept hopes alive for a possible interest rate cut.
OPEC+ Strategy and Market Predictions
Morgan Stanley analysts noted that OPEC+’s decision to delay its planned increase in oil output reflects the producers’ group’s commitment to market stability. They predict that unless there is a further decline in demand, Brent crude is likely to remain around the mid-$70s range.
Upcoming Reports to Watch
The recent selloff persisted even after OPEC announced it would not resume supply increases in October and despite the Energy Information Administration (EIA) reporting a significant draw in crude oil inventories for the last week of August.
This week, several key reports will influence oil prices. OPEC and the EIA are scheduled to release their monthly market updates on Tuesday, while the International Energy Agency’s (IEA) Oil Market Report will be published on Thursday.
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