Hawkish central bank comments weigh on Brent

Front-month ICE Brent has declined by $2.20/bbl on the day, to $83.01/bbl at 09.00 GMT.

PHOTO: (left to right) European Central Bank President Christine Lagarde and US Federal Reserve Chairman Jerome Powell. via the Linkedin of Christine Lagarde

Upward pressure

According to US Energy Information Administration's (EIA) March outlook, global liquid fuel consumption is forecast to average 100.9 million b/d this year. That is a 400,000 b/d upward revision from its February projection. Consumption is expected to rise by an additional 1.8 million b/d to 102.7 million b/d in 2024 - also a 400,000 b/d upward revision from February.

The EIA has forecast Russian crude oil production to drop by 700,000 b/d in March, which would outweigh the Kremlin's planned 500,000 b/d cut.

Downward pressure:

On the flip side, Brent could face pressure from rising global oil production over the next two years, according to the EIA. It predicts the Brent spot price to average $84/bbl in the first half of this year and then drop to average $82/bbl in the second half of 2023. It is expected to average even lower at $78/bbl in 2024.

Hawkish stances with calls for higher interest rates by the US Federal Reserve (Fed) and European Central Bank (ECB) are expected to keep a lid on Brent price gains.

Fed Chairman Jerome Powell said the central bank was "prepared to increase the pace of [interest] rate hikes" if necessary. ECB President Christine Lagarde warned of another 50-basis point hike in the central bank’s key interest rate in an interview with the Spanish TV channel Antena 3.

By Konica Bhatt

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