Oil traded in a narrow range as optimism in the stock market dragged futures into positive territory, reversing an earlier decline prompted by China’s cautious economic growth targets.
(Bloomberg) — Oil traded in a narrow range as optimism in the stock market dragged futures into positive territory, reversing an earlier decline prompted by China’s cautious economic growth targets.
West Texas Intermediate slid as much as 1.7% earlier in the day after China’s Premier Li Keqiang set an economic growth goal that was lower than economists projected, suggesting that a boost in the nation’s crude consumption will be smaller than the bulls had hoped for. Futures then followed stocks higher on bets that the US Federal Reserve won’t be as hawkish as previously feared.
“The China optimism comes and goes,” said Vikas Dwivedi, global oil and gas strategist at Macquarie Group Ltd. “It has been more mixed news than good news, and I think the market is looking for very decidedly good news.”
The opposing forces of optimism over China’s recovery and expectations of more interest rate hikes from the Fed have kept oil prices in a narrow range and squashed the market’s volatility this year. The commodity already has had more days with swings smaller than $2 in 2023 than it did in all of 2022.
Investors will be watching jobs data and speeches from Fed Chair Jerome Powell this week for clues on the path for rates, with the potential for higher borrowing costs and a longer period of restrictive monetary policy posing headwinds for global fuel consumption.
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