Oil steadied after a two-day gain as concerns over tighter US monetary policy vied with optimism over a revival in Chinese demand.
(Bloomberg) — Oil steadied after a two-day gain as concerns over tighter US monetary policy vied with optimism over a revival in Chinese demand.
West Texas Intermediate held near $78 a barrel after adding 2.7% over the previous two sessions. The Federal Reserve has signaling it’ll need to push rates higher to rein in inflation. That’s overshadowing signs that Chinese demand will recover after the biggest oil importer abandoned Covid Zero.
Still, there’s no lack of bullishness from oil-market participants. In the latest, Chevron Corp. Chief Executive Officer Mike Wirth said rising Chinese demand may aid prices. Amin Nasser, Wirth’s counterpart at Saudi Aramco, said consumption in the world’s second-largest economy was “very strong.”
Oil has softened slightly this year on a challenging global macroeconomic outlook and as US commercial inventories swelled. Nationwide stockpiles rose by a less-than-expected 1.2 million barrels last week, as crude shipments rose to a record, according to official figures released on Wednesday.
“The big picture is that crude has become locked in a narrow band, once again, with no major impetus to move prices sustainably higher or lower,” said Vandana Hari, founder of Vanda Insights in Singapore. “It’s a waiting game on China, as well as the global economy.”
Widely-watched time spreads are also signaling renewed strength in the market, with the prompt spread for global benchmark Brent — the gap between the two nearest contracts — at its widest since late November. The difference was 64 cents a barrel in backwardation, up from 14 cents a month ago.
Russian oil flows also remained in focus after Moscow said it would cut crude production this month in retaliation for sanctions and price caps on its oil exports. The Kremlin said it would be pragmatic when deciding on future output, and that its actions would depend on market developments.
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