Oil Price Update: OPEC Flags Downside Risks to US Summer Demand

• OPEC’s monthly report for March points to concerns over tight monetary policy in the US in as much as it could affect the ‘driving season’
• WTI technical considerations and levels of interest
• IG client sentiment reveals a mixed outlook as sentiment shifts to net short

OPEC’S MONTHLY REPORT POINTS TO MONETARY POLICY CONCERNS

OPEC has raised concern over continued restrictive monetary policy and the potential effect this might have on the typical uptick in oil demand in the US during the summer driving months. The summertime generally sees an increase in oil demand in the US as the warmer weather encourages commuters to head out on their summer holidays.

WTI (CL1!) DAILY CHART

OPEC highlighted downside risks for oil prices due to continued restrictive interest rates and that such monetary policy could result in reduced oil demand in the summer months. The concerns around restrictive policy and the potentially negative effect on oil demand factored into the group’s thinking before it was decided on April 2nd that OPEC + would cut supply even further than previously agreed (2 million barrels per day).