Oil held steady as investors weighed the extent of China’s demand recovery and fears a global slowdown with drag down consumption.
West Texas Intermediate futures were $80 a barrel after declining 1.8 per cent on Tuesday as mixed company earnings and weaker business activity spurred concerns about the US economy. While there’s expectation that China’s oil demand will rise after it ditched restrictive Covid rules, there’s still uncertainty about the strength of the rebound.
Crude is largely unchanged so far this month after a weak start to the year with recession fears running through the market. The outlook for China and a weaker dollar — which makes commodities priced in the currency more attractive — have helped oil claw back some ground. More uncertainty lies ahead with sanctions and price caps on Russian petroleum products set to kick in next month.
“There’s still a positive sentiment in the market due to China demand, but it may change if we see disappointing US GDP data tomorrow, or a surprising build” in American oil stockpiles on Wednesday, said Tamas Varga, an analyst at PVM Oil. “There’s still a positive sentiment in the market due to China demand, but it may change if we see disappointing US GDP data tomorrow, or a surprising build in the EIA report today.”
- WTI for March delivery was little changed at $80.15 a barrel at 10:37 a.m. in London, after swinging between small gains and losses
- Brent for the same month was also almost unchanged at $86.13.
- Brent’s prompt spread slipped back into contango on Tuesday following a brief foray into backwardation.
The American Petroleum Institute reported US crude inventories rose 3.38 million barrels last week, according to people familiar with the figures. Government data — which showed commercial stockpiles swelled by more than 27 million barrels in the prior two weeks — are due later Wednesday.
Traders are also keeping a close eye on moves by the Organization of Petroleum Exporting Countries and its allies. Delegates from group said that they expect an advisory committee of ministers to recommend keeping oil production at current levels when they meet next week.
© 2023 Bloomberg L.P.