By Florence Tan
SINGAPORE, April 17 (Reuters) - Oil prices edged up on
Monday, supported by OPEC+'s plans to cut more output, while
investors eyed Chinese economic data for signs of a demand
recovery by the world's No. 2 oil consumer.
Brent crude futures nudged 17 cents higher to $86.48
a barrel by 0144 GMT, while U.S. West Texas Intermediate crude was at $82.66 a barrel, up 14 cents.
Both contracts notched their fourth weekly gains last week
after the International Energy Agency (IEA) forecast record
demand in 2023 of 101.9 million barrels per day (bpd), up 2
million bpd on last year.
However, the IEA warned in its monthly report that the
output cuts announced by OPEC+ producers risk exacerbating an
oil supply deficit expected in the second half of the year and
could hurt consumers and a global economic recovery.
Rising costs for Middle East crude supplies, which meet more
than half of Asia's demand, are already squeezing refiners'
margins, prompting them to secure supplies from other regions.
Refiners are also ramping up gasoline output ahead of peak
summer demand while cutting diesel production amid worsening
margins.
Meanwhile, oil exports from northern Iraq to the Turkish
port of Ceyhan remain at a standstill almost three weeks after
an arbitration case ruled Ankara owed Baghdad compensation for
unauthorised exports.
Investors will be watching for the release of China's first
quarter gross domestic product (GDP) data this week, which is
expected to be positive for commodity prices, CMC Markets
analyst Tina Teng said.
Earnings from U.S. companies could also provide clues for
the Federal Reserve's policy path and the dollar's trajectory,
she added.
The greenback has been strengthening alongside interest rate
hikes, making dollar-denominated oil more expensive for holders
of other currencies.
Traders are betting that the Fed will raise its lending rate
in May by another quarter of a percentage point and pushed out
to late this year expectations of a rate cut, as typically
occurs in a slowdown. The market is pricing in a 78% chance of a 25 basis points
(bps) rate hike in May, with fewer than 60bps of cuts priced in
by the end of the year, IG Analyst Tony Sycamore said.
"(That) means some of the supportive tailwinds for crude oil
demand from expectations of Fed rate cuts are starting to fade,"
he added.
(Reporting by Florence Tan; Editing by Jamie Freed)
florence.tan.thomsonreuters.com@reuters.net))
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