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NEW YORK – Oil futures were little changed on Monday as rising concerns about global demand caused the market to take a break after prices jumped about 6% last week on worries that Middle East tensions could cause supply problems.
futures fell 26 cents, or 0.3%, to $81.93 a barrel by 10:48 a.m. EST (1548 GMT), while U.S. West Texas Intermediate crude (WTI) remained unchanged at $76.84.
The major forces underlying last week’s rally included persistent threats to shipping in the Red Sea, Ukrainian strikes on Russian refineries and U.S. refinery maintenance, Tamas Varga of oil broker PVM told Reuters.
“These factors have not subsided yet – and for this reason, I believe that what we see at the moment is only a retracement.”
U.S. gasoline futures, which soared 9% last week amid refinery downtime, extended gains by about 1% on Monday to a three-month high.
Logistics disruptions in the Red Sea continued on Monday, with Iran-backed Houthis in Yemen saying they targeted a cargo ship, which they claimed was American.
Shipping trackers said the Marshall Islands-flagged ship was Greek-owned, while analysts said it had been heading to Iran with a corn cargo.
The Houthis have targeted shipping with drones and missiles since November in solidarity with Palestinians in Gaza. The U.S. has led retaliatory strikes on Houthi missile sites since January.
An Israeli rescue operation freed two hostages held by Iran-backed Hamas militants in Rafah, but supporting airstrikes killed nearly 70 Palestinians in the southern Gaza city.
In supply news, Saudi Arabia’s energy minister said the reason behind the kingdom’s recent decision to halt its oil capacity expansion plans was the energy transition, adding that it has plenty of spare capacity to cushion the oil market.
Fellow member of the Organization of the Petroleum Exporting Countries Iraq said it is committed to the group’s decisions and after its second voluntary cut announced in December, it is also committed to producing no more than 4 million barrels per day (bpd).
LINGERING DEMAND CONCERNS
A U.S. Federal Reserve official said she had no interest in recommending an interest rate cut, adding to the chorus on further reining in inflation.
Higher interest rates slow economic growth, dampening oil demand.
On the other side of the Atlantic, European Central Bank officials soothed markets by suggesting cuts were on the table sooner rather than later.
U.S. inflation data is expected on Tuesday, while British inflation and euro zone Gross Domestic Product (GDP) data should land on Wednesday.
France’s TotalEnergies (EPA:) CEO Patrick Pouyanne said he does not see peak oil demand in the numbers, adding “we should exit debate about peak oil demand, be serious, and invest.”
Paris-based oil forecaster the International Energy Agency (IEA), which represents industrialised countries, predicts oil demand will peak by 2030, undercutting the rationale for investment.
But OPEC believes oil use will keep rising over the next two decades.
