SINGAPORE- Oil prices were in a holding pattern on Thursday, as a larger-than-expected draw in US crude stocks and hopes for China demand contended with worries that more aggressive US interest rate rises would slow economic growth and dent oil consumption.
Brent crude futures had edged up by 2 cents to $82.68 per barrel, while US West Texas Intermediate (WTI) crude futures eased by 1 cent to $76.65 a barrel.
On Tuesday, oil futures fell more than 3 percent and posted their largest daily fall since early January after comments by US Federal Reserve Chair Jerome Powell that the central bank would likely need to raise interest rates more than expected in response to recent strong data.
“Oil prices are still under the influence of Powell’s hawkish tone recently, and the increasing possibility of another 50 basis points hike rather than a 25 basis points one,” said Suvro Sarkar, lead energy analyst at DBS Bank.
“Oil prices will be caught in the tug of war between sentiment surrounding rate hikes and inflation targeting on the one hand, and China reopening on the other for much of the year, at least the first half.”
While China’s crude oil imports fell 1.3 percent in the first two months of 2023 from a year earlier, analysts pointed to accelerating imports in February as a sign that fuel demand was rebounding after Beijing scrapped COVID-19 controls.
At a conference in Houston on Tuesday, the secretary general of the Organization of the Petroleum Exporting Countries said China’s oil demand would grow 500,000 to 600,000 barrels per day in 2023, and the organization was “quite optimistic, cautiously.”
