Oil Steady As Markets Weigh OPEC+ Surprise Cuts Amid Demand Woes

• Oil prices were little changed in choppy trading on Tuesday as investors weighed OPEC+ planned production cuts against weak U.S. and Chinese economic data that could suggest cooling oil demand.
• Brent crude and WTI had jumped by more than 6% on Monday after the Organization of the Petroleum Exporting Countries and allies, including Russia, collectively known as OPEC+, rocked markets with an announcement of voluntary production cuts of 1.66 million barrels per day (bpd) from May until the end of 2023.
• U.S. job openings in February fell to the lowest level in nearly two years, and a slump in U.S. manufacturing activity in March raised concerns about oil demand. Weak manufacturing activity in China last month also added to the woes.
• Stock markets declined on the weaker economic data, while gold crossed the key $2,000 level as investors rushed to buy the safe haven asset. The economic signals ran alongside fears of an inflationary hit to the world economy, as rising oil prices fuel higher interest rates.
• OPEC+'s latest output targets bring the total volume of cuts by OPEC+ to 3.66 million bpd, including a 2 million-barrel cut last October, equal to about 3.7% of global demand.
• The production curbs led many analysts to raise their Brent oil price forecasts to around $100 per barrel by year-end. Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of 2023 and to $100 for 2024.
• Market watchers have been trying to gauge how much longer the U.S. Federal Reserve Bank may need to keep raising rates to cool inflation and whether the U.S. economy may be headed for a recession. Investors now see about a 40% chance the Fed will hike rates by a quarter basis point in May, with a roughly 60% chance of a pause.

(Source: Reuters)