As supply restrictions on oil emerged, the week started with stable prices. Brent was trading around $85 a barrel:
West Texas Intermediate was trading around $80.50 a barrel.
Last week, oil prices jumped on Monday, and prices rose by 7% throughout the week. This was due to OPEC+ announcing additional production cuts, resulting in a total cut of 3.6 million barrels a day.
Currently, traders are busy assessing the impact of the production cut on global oil supplies. Clarity will come later this week when OPEC and the International Energy Agency publish their new monthly oil market reports.
Bloomberg noted that in Russia, oil production fell by 700,000 barrels a day instead of the announced 500,000 barrels a day in March. They added that data on processing and export costs did not correspond to the initial figure.
US economic data coming out this week will play a key role for energy markets. With OPEC's decision partly pushing out short sellers, oil prices may better reflect market fundamentals.
Those who have been bearish are questioning the outlook for demand as a contraction occurs. Those who were optimistic are now expecting an even tougher market.
On top of these developments, additional supply constraints are coming from Iraq, where crude oil supplies from Kurdistan have yet to resume.
But if the US releases weak macro data this week, it could increase pressure on prices. The US consumer price index for March will be released on Wednesday. Despite growing concerns about supply, it could lower prices. According to Reuters, this may not happen as inflation fell to 5.2% in March from a February reading of 6%.
