LONDON—Oil prices slumped by about 1 percent on Monday as investors focused on short-term demand concerns ahead of key U.S. inflation data.
Brent crude futures fell $1.14, or 1.3 percent, to $85.25 a barrel by 1005 GMT after a 2.2 percent gain on Friday. U.S. West Texas Intermediate crude was down $1.11, or 1.3 percent, at $78.61 after a 2.1 percent gain in the previous session.
“Crude prices are softening as energy traders anticipate a potentially weakening crude demand outlook as a pivotal inflation report could force the Fed to tighten policy much more aggressively,” said Edward Moya, senior analyst at OANDA, referring to U.S. consumer price data due on Feb. 14.
“This week could deliver a make-or-break moment in how bad a recession Wall Street prices in.”
The U.S. Federal Reserve has been raising interest rates to rein in inflation, leading to concerns that the move would slow economic activity and demand for oil.
Additionally, supply concerns were relieved somewhat by the resumption of Azerbaijani oil exports from Turkey’s Ceyhan terminal on Sunday.
The terminal had been damaged by the devastating earthquakes that hit Turkey and Syria last week. It is the storage and loading point for pipelines that carry oil from Azerbaijan and Iraq.
Oil prices had risen on Friday after Russia, the world’s third-largest oil producer, said it would cut crude production in March by 500,000 barrels per day (bpd), or about 5 percent of output, in retaliation against western curbs imposed on its exports in response to the Ukraine conflict.
Both the Brent and WTI contracts rose more than 8 percent last week, buoyed by optimism over demand recovery in China after COVID-19 curbs were scrapped in December.
