Oil Prices Steady as Markets Refocus on Demand Concerns

FILE PHOTO: A view of the newly-commissioned Dangote petroleum refinery is pictured in Ibeju-Lekki, Lagos, Nigeria May 22, 2023. REUTERS/Temilade Adelaja/File Photo

Oil prices steadied on Tuesday after rising for five consecutive sessions, as markets refocused on concerns about demand after OPEC on Monday cut its forecast for demand growth in 2024 due to softer expectations in China.
Benchmark Brent crude futures were down 30 cents, or 0.36%, at $82.00 a barrel as of 0820 GMT. US West Texas Intermediate crude was down 29 cents, or 0.36%, at $79.77, Reuters reported.
Brent on Monday gained more than 3% while US crude futures rose more than 4% on expectations of a widening Middle Eastern conflict that could tighten global crude oil supplies.
The 2024 demand forecast cut from the Organization of the Petroleum Exporting Countries' (OPEC) highlighted the dilemma faced by the wider OPEC+ group as it aims to raise output from October.
"Any reflection of higher economic risks could weigh on oil prices, at a time when OPEC+ has cut their 2024 demand forecast and are set to roll back on their production cuts starting October, which may point to a less tight oil market ahead," said Yeap Jun Rong, market strategist at IG.
But he added investors remained watchful of the latest geopolitical tensions.
The Middle East conflict has escalated, with the US preparing for what could be significant attacks by Iran or its proxies in the region as soon as this week, White House national security spokesperson John Kirby said on Monday.
Any attack could tighten access to global crude supplies and boost prices. An assault could also lead the United States to place embargoes on Iranian crude exports, potentially affecting 1.5 million barrels per day of supply, analysts said.
"If an eventual Iran retaliation falls within the scope of a so-called proportionate response, and the macro disappoints, then Brent holding on to its $80 handle may prove challenging," said Harry Tchilinguirian, head of research at Onyx Capital Group.
Markets are also preparing for Wednesday's US consumer price index report that will give a crucial read on inflation.