Oil is on track to snap its longest streak of losses since December, bouncing back as investors consider the overall US economy to be healthier than anticipated as the Federal Reserve continues its efforts to tame inflation.
(Bloomberg) — Oil is on track to snap its longest streak of losses since December, bouncing back as investors consider the overall US economy to be healthier than anticipated as the Federal Reserve continues its efforts to tame inflation.
The revision to fourth-quarter gross domestic product shows inflation was higher than previously reported, an indication that demand might not be as damaged as previously thought as markets face off against the Fed’s rate hikes. And while China has dominated headlines, India, the second-largest country, is projected to increase its demand for oil products as it looks to continue rapid growth.
Crude is on the lower end of its 2023 trading range, as renewed expectations of rate hikes countered longer-term optimism about Chinese consumption rising later in the year. While some still hold fast to their earlier predictions, several Wall Street banks are starting to temper their bullish outlook for oil prices, with Morgan Stanley the latest to trim its forecasts.
“We’re stuck in this shoulder season for oil where we’re not yet into summer seasonals, we’re getting out of winter seasonals and the markets are marking time,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.
Builds are also expected with the American Petroleum Institute reporting US crude inventories rose by 9.9 million barrels last week, according to people familiar with the data. Stockpiles are at the highest level since June 2021 and official weekly figures from the Energy Information Administration are due later Thursday.
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