Oil steadied above a three-week low, as traders digested the Federal Reserve’s latest meeting for the outlook on interest rates and weighed the potential for better demand in China.
West Texas Intermediate traded near $76.50 a barrel after losing 3.1 per cent in the previous session following another build in US stockpiles. European stock and US equity futures rose after Fed Chair Jerome Powell signaled that the central bank has made progress in its battle against inflation.
Crude has traded in a range of about $10 a barrel so far this year, as traders weigh the prospect of a recovery in Chinese consumption against worries over near-term fundamentals. The nearest portion of the WTI futures curve is pointing to oversupply, while sanctions on Russian supply are yet to create the price spikes that many had feared.
“Oil staged a partial, but weak, post-FOMC rebound,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Generally I think the message the market is sending right now is that China demand will recover, but not at the rate the market tried to price in ahead of the Lunar New Year.”
- WTI for March delivery was little changed at $76.40 a barrel at 9:37 a.m. in London.
- Brent for April settlement was 0.1 per cent lower at $82.73 a barrel.
Meanwhile, Goldman Sachs Group Inc. analysts including Yulia Zhestkova Grigsby said that warm weather in the northern hemisphere winter likely lowered global oil demand by about 300,000 barrels a day earlier in January. The return of colder conditions has now provided a 200,000 barrels-a-day demand boost, they added.
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