Alghadeer TV Alghadeer TV
Oil prices fluctuated in a narrow range on Thursday as the market weighed mixed U.S. economic signals and prospects for a Chinese demand recovery with a build in U.S. crude stockpiles and a stronger dollar.
Brent crude futures rose 7 cents to $85.45 a barrel by 11:33 a.m. EST (1633 GMT). U.S. West Texas Intermediate crude (WTI) was up 9 cents at $78.68.
“The complex is chopping around so far today after being jostled by yesterday’s weekly EIA (Energy Information Administration) and monthly IEA (International Energy Agency) reports amidst conflicting views regarding future interest rate trends and the potential effect on recession,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
While U.S. data suggested the U.S. jobs market remained robust, a gauge of manufacturing in the mid-Atlantic region unexpectedly plunged.
Federal Reserve Bank of Cleveland President Loretta Mester said the central bank could become more aggressive with rate rises in the future if inflation surprises to the upside, after the latest reading on inflation showed prices remaining stubbornly high. But Mester does not expect the U.S. to fall into recession.
The dollar climbed to a six-week peak against a basket of currencies after the strong U.S. data, weighing on oil as a strong dollar makes the greenback-denominated commodity more expensive for holders of other currencies.
“Brent failed again to move above the 100-day moving average this week,” said UBS analyst Giovanni Staunovo.
The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks, while WTI has ranged between $72 and $83 since December.
The Energy Information Administration (EIA) on Wednesday reported U.S. crude oil stockpiles last week rose to their highest level since June 2021 after a larger-than-expected build.
“Oil prices are very choppy at the moment, with traders having a lot to take in,” OANDA analyst Craig Erlam said in a note, pointing to Russia’s 500,000 barrel-per-day cut to oil production in March, a strong Chinese economic recovery and an uncertain global economic outlook.
The prospect of a Chinese demand recovery has contributed to bullish sentiment.
China will account for almost half of global oil demand growth this year after relaxing its COVID-19 curbs, the International Energy Agency (IEA) said on Wednesday.
The Paris-based watchdog echoed similar views from the Organization of the Petroleum Exporting Countries, which this week raised its 2023 global oil demand growth forecast on Chinese demand growth.
On the supply side, the market is keeping a close eye on Russian oil production.
Russian oil exports were down in January by only 160,000 bpd from levels before the Ukraine conflict, but about 1 million bpd of production will be shut in by the end of the first quarter, the IEA said.
