HOUSTON: Oil prices edged lower in choppy trading on Tuesday as weak economic data from the United States and China prompted fears of cooling oil demand and offset earlier gains from OPEC+ plans to cut more production.
Brent crude futures were down 73 cents, or 0.8%, at $84.20 a barrel by 12:06 p.m. EDT (1606 GMT). US West Texas Intermediate (WTI) crude futures traded at $80.03 a barrel, down 39 cents, or 0.5%.
“We will need to see demand hold and grow to push crude into the upper $80’s,” said Dennis Kissler, senior vice president of trading at BOK Financial.
A slump in US manufacturing activity in March to its lowest level in nearly three years and weak manufacturing activity in China last month have raised concerns about oil demand.
Brent crude and WTI had jumped by more than 6% on Monday after the Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, rocked markets with an announcement of voluntary production cuts of 1.66 million barrels per day (bpd) from May until the end of 2023.
The latest pledges bring the total volume of cuts by OPEC+ to 3.66 million bpd, including a 2 million-barrel cut last October, equal to about 3.7% of global demand.
The OPEC+ production curbs led many analysts to raise their Brent oil price forecasts to around $100 per barrel by year-end. Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of this year, and to $100 for 2024.
Investors also worried about higher costs for businesses and consumers, raising fears an inflationary hit to the world economy from rising oil prices will result in more interest rate hikes.
Stock markets also declined after data suggested a cooling in the US labor market.
Market-watchers have been trying to gauge how much longer the US Federal Reserve may need to keep raising rates to cool inflation, and whether the US economy may be headed for a recession.
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