Oil lost ground after a fourth week of gains as a rallying U.S. dollar and demand headwinds countered warnings from the International Energy Agency of higher prices ahead.

West Texas Intermediate futures dipped below US$82 a barrel on Monday after previously posting the longest run of weekly increases since June. Lingering concerns over global inflation and demand for oil products were also factors.

“Clearly, worries about stuttering economic growth and untamable inflation are capping efforts to push prices higher,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “Breaking above the $90 barrier on Brent will be a tall order in the very near future.”

The IEA warned on Friday that the surprise OPEC production cut announced earlier this month will lead to painful price increases for consumers. The supply curbs that begin in May should further tighten the outlook for the second half of the year, the agency said.

Oil has rebounded from the banking crisis that rippled across markets in March and drove futures to a 15-month low. Shrinking crude stockpiles at the key U.S. storage hub of Cushing and interruptions to supplies from Iraqi Kurdistan have added to the tightening of global markets.

“OPEC+ cuts have clearly boosted prices,” Warren Patterson, the Singapore-based head of commodities strategy at ING Groep NV, said in a note. “However, weaker refinery margins are a concern, signaling weaker demand, particularly for middle distillates.”

Some Asian refiners are considering cuts to crude processing as profit margins shrink, while there are signs of weakness in the diesel market that may exacerbate slowdown concerns. That could put a cap on further oil-price gains.

“The trajectory over the next few days will depend on which way the winds blow as the first-quarter reporting season in the U.S. gets into full swing,” said Vandana Hari, founder of consultancy Vanda Insights. Traders will also be watching “what the China first-quarter GDP data says, and ongoing bets over the Fed’s policy as its next meeting draws closer.”

Prices:

  • WTI for May delivery dipped 0.8 per cent to $81.90 a barrel as of 8:55 a.m. in New York
  • Brent for June settlement was also lower at $85.74 a barrel.