Oil prices dipped in early trade on Thursday, following the release of weak U.S. job openings data, which is seen as a sign of slowing economic conditions that could impact demand. West Texas Intermediate U.S. crude declined by 14 cents to $80.47 a barrel at 2241 GMT, while Brent crude futures settled up by 5 cents, or 0.1%, to $84.99 a barrel. The prices of crude surged by more than 6% on Monday, following OPEC+’s decision to commit to voluntary production cuts, which include Russia.
The recent reduction of US crude and fuel stockpiles, as well as earlier OPEC+ cuts, had also lifted market sentiment. However, the labour market’s cooling and drop in February’s US job openings to nearly a two-year low offset the gains. “Crude oil’s rally paused as it battled the headwinds created by the weak economic data. This offset more positive fundamentals,” said ANZ Research in a note.
Despite the decline in crude prices, Saudi Arabia, the world’s biggest oil exporter, has raised the prices of its flagship crude for Asian buyers for the third consecutive month, providing support. ANZ Research also highlighted that the move indicates “further strength in demand in the region.” Last week, US government data revealed that US crude inventories fell by 3.7 million barrels, approximately 1.5 million barrels more than anticipated, while gasoline and distillate stocks also dropped more than expected, declining by 4.1 million barrels and 3.6 million barrels, respectively.
Despite the recent price drop, crude oil prices are still up by more than 60% since the beginning of the year, driven primarily by robust demand recovery as economies around the world continue to reopen. However, uncertainties remain, with the ongoing COVID-19 pandemic causing fluctuations in demand and concerns over the new strain Omicron. Investors will be closely watching the upcoming OPEC+ meeting on 4 April for any indication of future output policies.
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