Oil managed to hold on to its gains on Thursday, but the enthusiasm in the market slowed as traders dug into US economic reports that delivered mixed results.
(Bloomberg) — Oil managed to hold on to its gains on Thursday, but the enthusiasm in the market slowed as traders dug into US economic reports that delivered mixed results.
West Texas Intermediate fluctuated, with prices up as much as 2.5% before tempering back down to trade just above $81 a barrel. The swings matched similar vacillations in the equity markets.
The US economy expanded by more than forecast in the fourth quarter, government figures showed, initially easing some recession fears. Still, some investors are cautious about the long-term outlook, as other economic indicators suggest potential slowdowns to come. Personal consumption, the biggest part of the economy, climbed at a below-forecast rate.
“Oil markets are having a sugar crash,” said Ed Moya, senior market analyst at Oanda. The mixed data signals that “this economy needs to have a recession to get the job done with fighting inflation.”
Oil has recovered from a steep drop at the start of the year, led by demand from China — the world’s largest crude importer. Traders are starting to see a pick up in energy demand, with Chinese tourism likely having a major impact on consumption. However, the US economy is not inspiring confidence in many traders as they remain concerned about demand destruction.
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