Oil prices edged down slightly on Monday, holding on to most of their recent gains amid expectations of tighter supply from OPEC+ cuts, attacks on Russian refineries and upbeat Chinese manufacturing data.
Brent crude fell 17 cents, or 0.2%, to $86.83 a barrel by 0017 GMT after rising 2.4% last week. U.S. West Texas Intermediate crude was at $83.06 a barrel, down 11 cents, or 0.1%, following a 3.2% gain last week.
Due to the Easter vacation, which is observed in various nations, low trade volumes are anticipated on Monday.
For the third month in a row, both benchmarks closed higher. Brent has been trading above $85 a barrel since mid-March, thanks to the Organization of the Petroleum Exporting Countries (OPEC+) and their allies' commitment to prolong production cuts through the end of June, which may result in a shortage of crude during the northern hemisphere's summer.
In order to equitably distribute production cutbacks with other OPEC+ members, Russian Deputy Prime Minister Alexander Novak announced on Friday that the country's oil businesses will concentrate on lowering output rather than exports in the second quarter.
Numerous Russian refineries were taken down by drone strikes, which is anticipated to lower Russia's petroleum exports. Energy Aspects analysts said in a report that "strong Q2 24 demand fundamentals are further supported by geopolitical risks to crude and heavy feedstock supplies."
The assaults have caused over a million barrels of daily Russian crude processing capacity to go offline, affecting the country's high-sulfur fuel oil exports that are processed at refineries in China and India, the consultant continued.
Contrary to Goldman Sachs experts' prediction of a 200,000 bpd decline in 2024, oil consumption in Europe was stronger than anticipated in February, increasing by 100,000 bpd year over year.
The downside risk from China's continued downturn in demand is outweighed by Europe's strong demand, a slowdown in U.S. production growth, and the potential extension of OPEC+cuts until 2024, they stated in a note.
"We see the risks to our forecast that Brent will average $83/bbl in 2024Q4 as skewed moderately to the upside," the analysts stated.
Even still, the world's top crude importer saw a rise in manufacturing activity in March for the first time in six months, according to an official factory survey released on Sunday. This helped to offset the negative impact of the ongoing property sector crisis on the economy.
In order to sustain the global economy and the demand for oil, investors are also closely examining U.S. economic statistics for indications on when the Federal Reserve may lower interest rates this year.