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Brent hovers above $83 as inflation data takes center stage

By Natalie Grover

LONDON (Reuters) – Oil prices rose on Monday after losing about $1 a barrel in the previous session on signs that U.S. policymakers will keep interest rates higher for longer.

Brent crude futures were up 55 cents at $83.34 a barrel by 1239 GMT. U.S. West Texas Intermediate crude futures were up 62 cents at $78.88.

While prices were supported by several factors last week, including the lack of progress in the latest round of negotiations to end hostilities in Gaza, economic factors are back in focus.

Comments from politicians suggest that a fall in borrowing costs is expected sooner in Britain and Europe than in the United States.

US inflation data this week will further inform the Federal Reserve on interest rate policy.

Analysts expect the US central bank to keep its policy rate on hold for longer, supporting the dollar and making dollar-denominated oil more expensive for investors holding other currencies.

Meanwhile, Chinese data over the weekend showed consumer prices rose for a third straight month in April, while producer prices extended declines, signaling a pick-up in domestic demand.

On the supply front, in what has become a series of attacks by Russia and Ukraine on each other’s energy infrastructure, Kiev launched its latest salvo over the weekend with a drone strike that partially shut down the largest refinery in southern Russia , sources told Reuters.

Expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, will extend supply cuts in the second half of the year.

Iraq, OPEC’s second-biggest producer, is committed to voluntarily cutting oil production agreed by the producer group, its oil minister told the state news agency on Sunday.

The comments followed the minister’s suggestion on Saturday that Iraq had made enough voluntary cuts and would not agree to any further cuts proposed by the wider OPEC+ group at its meeting in June.

OPEC+ previously complained to Iraq that it pumped more than its production quota in the first three months of 2024. Baghdad agreed to make up for it with further output cuts for the rest of the year, the group said.

(Reporting by Natalie Grover in London and Florence Tan in Singapore Editing by David Goodman)