(Bloomberg) — Oil steadied after a weekly decline, with the market still digesting OPEC+’s decision to restore supply, as traders eagerly await a series of industry reports and a decision to the Federal Reserve on interest rates.
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Brent crude was trading below $80 a barrel after losing 2.5% last week as algorithmic trading amplified declines following the alliance’s announcement that it would begin returning more supply to from the third trimester. West Texas Intermediate was near $76.
Traders will be watching monthly reports from OPEC and the International Energy Agency, due Tuesday and Wednesday, which will shed light on the health of the sector. The Fed also releases its interest rate decision midweek. Strong economic data and stubbornly high inflation have led the market to bet that the Fed is nearing its long-awaited pivot of reducing borrowing costs.
“Investors who overreacted to last week’s OPEC announcement are trying to seize the possibility that additional barrels may not end up entering global supplies,” said Priyanka Sachdeva, senior market analyst at broker Phillip Nova Pte. Still, the macroeconomic outlook is at the forefront of traders’ minds, with concerns growing that the Fed will keep rates on hold, she said.
After OPEC+’s announcement of a rollback of production cuts caused prices to plummet, officials stressed that the supply increase had always been temporary and could be suspended.
Crude has been falling since early April due to a weakening demand outlook, as fund managers reduced their net long positions in Brent from a record level since 2011, bringing their holdings to the least bullish level in a decade. Net long positions in the US benchmark WTI also declined.
Geopolitics remained at the center of concerns. Tensions escalated in the Middle East after Israel freed four hostages during an operation in Gaza, part of an attack that killed more than 200 Palestinians, according to the media office of the government-led government. Hamas. And in Europe, far-right parties have gained ground in European Parliament elections.
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