Oil was little changed as the bullish impetus from OPEC+ production cuts faded against a backdrop of weaker-than-expected demand.

U.S. shale output is forecast to grind higher in May, while the margin of profit for producing diesel from a barrel of crude is at the lowest in a year, underscoring a weaker demand outlook. Global supplies are also showing signs of growth as Russia’s crude exports bounced back above 3 million barrels a day last week, despite Moscow saying it had lowered output.

The short squeeze precipitated by the surprise production cut is running out of steam, said Dan Ghali a commodity strategist at TD Securities. The algorithmic trend followers that poured into the market during the price surge are nominally supporting the market as fundamentals tilt bearish once again.

“We estimate that marginal buying activity from this cohort in WTI crude is putting a halt to the bleeding, keeping prices locked in a tight range,” Ghali said.

Despite the pause in crude’s recent rally, many market watchers are betting China’s rebound from COVID-19 restrictions will lead to price gains over the rest of the year. China, which is the largest oil importer in the world, grew its economy at the fastest pace in a year, putting the country on track to reach its growth goal.

Investors are also watching for an economic survey from the Federal Reserve and further comments from officials this week, which will provide insight on the health of the US economy and the likely path of monetary policy.

Prices:

• WTI for May delivery rose 14 cents at 11:18 a.m. in New York.
• Brent for June settlement gained 3 cents to US$84.79 a barrel