Oil maintains recent gain

Oil held steady on Monday at around $76 per barrel, maintaining its recent gains. Meantime, the possibility of fresh Russian oil production restrictions outweighed growing US crude inventories and market worries about continuing inflation and rising interest rates.

Russia revealed intentions to go beyond its previously announced output limitations of 500,000 barrels per day and cut oil shipments from its western ports by up to 25% in March compared to February. In addition, investors anticipate that China’s oil imports will reach a new high in 2023 due to the nation’s growing need for transportation fuel and the start-up of new refineries.

The US stockpiles increased by 7.648 million barrels to 850.6 million in the week ending February 17th, the highest level since September, according to the most recent EIA report. The Fed’s preferred inflation indicator, the US PCE data, came in hotter than anticipated, which increased concerns about the possibility of a recession.

Despite the rise in US crude stockpiles, which added another 7.6M barrels last week, crude oil prices ended the week barely altered due to Russia’s plans to reduce oil production by 500K barrels per day in March. The four-week average of gasoline product supplied, a proxy for US demand, was at its second-lowest seasonal level since 2014.

Inflation worries persist

Investors became more concerned this week that the Federal Reserve would continue raising interest rates after reading the minutes from the most recent policy meeting and learning that the majority of officials remained pessimistic about inflation, indicating that further monetary tightening would be implemented.

Consumer spending increased last month by the most in nearly two years, according to data released on Friday. The Fed’s preferred inflation indicator unexpectedly jumped in January, but trends are tempering some of the hope that China’s energy demand will increase significantly once COVID limitations are lifted.