DTN Oil

WASHINGTON (DTN) -- Following the seventh consecutive week of steep losses, West Texas Intermediate futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange steadied on Monday as investors turned focus to this week's macroeconomic data releases in the United States, European Union, and China for an update on the global demand outlook towards the end of the year.

The combination of a mild winter, building fuel inventories across developed economies and skepticism around OPEC+ production cuts sent oil prices on the longest losing streak in five years. The international crude benchmark Brent for February delivery stalled near $76 per bbl on Monday after plunging to a five-month low of $73.60 per bbl on Dec. 7. Analysts at CITI Research believe oil's recent move lower is mostly done and that OPEC+ will likely succeed in rebalancing the market in the first quarter 2024.

However, the 24-producer coalition will need to maintain deep production cuts throughout 2024 to ensure supplies do not outpace growth in global oil demand. OPEC+ members announced on Dec. 5 additional voluntary cuts of 868,000 bpd, which come atop an existing 1.3 million bpd in voluntary cuts by Saudi Arabia and Russia, but there are growing concerns over compliance and implementation.

This highlights the lack of an exit strategy on the part of OPEC+ that currently sits on 5 million bpd of spare capacity at a time when production outside of the coalition is seen growing by 1.6 million bpd next year.

The U.S. Energy Information Administration, Organization of the Petroleum Exporting Countries and International Energy Agency will release their latest monthly outlooks for global supply and demand fundamentals on Tuesday, Wednesday, and Thursday, respectively.

In addition to the monthly reports, traders will also position ahead of the release of U.S. consumer and producer price indexes, scheduled for Tuesday and Wednesday morning. Consensus calls for inflation to have moderated further in November under pressure from a slowing economy and signs of retreating consumer demand. Inflation is currently running at a 3.2% annual pace -- well below its post-pandemic peak of 9.1% reported in June 2022.

However, there is still plenty of momentum across the U.S. economy that has been an island of sustainable growth relative to a sharp slowdown across other advanced economies. November's employment report offered more evidence of the strength of the U.S. labor market, with employers adding 199,000 new jobs and the unemployment rate falling back to a four-month low of 3.7%.

On the session, WTI January futures on NYMEX posted little change to settle at $71.32 per bbl, with the three-month calendar spread ending the session in a $0.60 contango market structure. The International crude benchmark Brent for February added $0.19 per bbl to settle at $76.03 per bbl, with the three-month calendar spread ending in a modest $0.36 contango. NYMEX RBOB January futures slipped $0.0067 per gallon to $2.0431 and NYMEX ULSD futures for January delivery climbed $0.0277 to $2.6087 per gallon.

Liubov Georges can be reached at liubov.georges@dtn.com.