Oil prices experienced a downturn this week as concerns stemming from a significant increase in U.S. crude stockpiles coupled with exacerbating worries about sluggish demand globally.  Additionally, apprehensions surrounding the likelihood of sustained elevated interest rates in the United States for longer dampened the market.

Traders have tempered expectations for imminent rate cuts following robust economic data, including elevated consumer and producer price indicators. With the possibility of an easing cycle now pushed back to June, compared to previous projections for March, investors are bracing for continued high borrowing costs that could potentially stifle economic growth and in turn oil consumption, arguably the same outlook now appears more likely for UK interest rates.

While geopolitical tensions in the Middle East have previously supported oil prices, uncertainty persists regarding the impact on global supply dynamics. Meanwhile, analysts anticipate that OPEC+ may extend voluntary output cuts in response to the evolving demand landscape. This may provide some support to prices amidst ongoing uncertainty.

OPEC initially agreed to reduce combined supply by 2.2 million bpd over the first quarter of the year and meet in early March to decide whether it should extend the cuts for another quarter. Given the tight range that oil has been trading in amid multiple headwinds, the extension was virtually a certainty.

Some observers even expect OPEC+ to extend the cuts until the end of the year, which has lent support to prices on expectations that this would bring the oil market closer to a shortage.

Therefore the outlook for oil process remains fairly mixed as we enter Match, an the first month of Spring but the welcome news for fuel cards users is that a further fall in the region of 1.2 pence per litre can be expected next week.

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