Brent crude futures were down 30 cents, or 0.3%, to $84.63 a barrel by 11:05 a.m. ET (1505 GMT). U.S. West Texas Intermediate (WTI) crude futures traded at $80.19 a barrel, down 23 cents, or 0.2%.
“While the price action in crude is impressive, we will need to see demand hold and grow to push crude into the upper $80’s,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Both benchmarks jumped by more than 6% on Monday after the Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, rocked markets with an announcement of voluntary production cuts of 1.66 million barrels per day (bpd) from May until the end of 2023.
The latest pledges bring the total volume of cuts by OPEC+ to 3.66 million bpd, including a 2 million barrel cut last October, equal to about 3.7% of global demand.
The OPEC+ production curbs led many analysts to raise their Brent oil price forecasts to around $100 per barrel by year-end. Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of this year, and to $100 for 2024.
However, a slump in U.S. manufacturing activity in March to its lowest level in nearly three years, and weak manufacturing activity in China last month raised demand concerns. Investors also worried about higher costs for businesses and consumers, raising fears an inflationary hit to the world economy from rising oil prices will result in more interest rate hikes.
Market watchers have been trying to gauge how much longer the U.S. Federal Reserve may need to keep raising rates to cool inflation, and whether the U.S. economy may be headed for a recession.
