API Report

The American Petroleum Institute (API) reported a modest increase in U.S. crude stocks, with a rise of 423,000 barrels in the week ending March 1. This figure is significantly lower than the 2.1 million barrels anticipated by analysts. The market eagerly anticipates the official data from the U.S. Energy Information Administration for further insights.

OPEC+ Impact

OPEC+ played a crucial role, extending output cuts by 2.2 million barrels per day till the end of the second quarter. This decision has induced supply tightness, particularly in Asian markets. Additionally, disruptions in oil tanker movements due to Red Sea attacks further exacerbated this tightness. Saudi Arabia’s announcement of higher April crude prices to Asia underscores the physical supply constraints.

Concerns in China

China’s economic growth target of around 5% for 2024, without major stimulus plans, has raised concerns over sluggish oil demand growth. The lack of fiscal expansion to support this target has left markets apprehensive about future demand.

Federal Reserve’s Role

All eyes are on Federal Reserve Chair Jerome Powell’s congressional testimony, with the market seeking clarity on future monetary policy, including potential interest rate cuts. The Fed’s stance on inflation and economic indicators, such as consumer prices and employment data, are critical factors influencing market sentiment.

US Labor Market Reports

The upcoming U.S. non-farm payrolls data is expected to show a moderated increase in jobs for February. Indicators suggest a healthy but cooling labor market, with layoffs remaining low and signs of gradual easing in wage pressure.

Short-Term Forecast

The short-term outlook for oil markets hinges on Powell’s testimony and the impending jobs data, which will provide further direction on U.S. interest rates. A potential Fed rate cut could be perceived positively, impacting both the economy and oil demand.