SINGAPORE: Oil prices have been little modified on Thursday as traders weighed tight provides towards the prospect of a large U.S. rate hike that might stem inflation and curb crude demand.
Brent crude futures for September edged up 5 cents to $99.62 a barrel by 0620 GMT after settling beneath $100 for the second straight session on Wednesday.
U.S. West Texas Intermediate crude for August supply was at $96.23 a barrel, down 7 cents after rising 46 cents within the earlier session.
Oil prices have tumbled up to now two weeks on recession considerations regardless of a drop in crude and refined merchandise exports from Russia amid Western sanctions and provide disruption in Libya.
“It is all sentiment pushed in the intervening time and that has brought about most of the losses seen in oil markets over the previous couple of weeks,” mentioned Howie Lee, an economist at Singapore’s OCBC financial institution.
“I do not see any vital adjustments in oil provide fundamentals and that’s in all probability why we nonetheless see Brent holding across the $100 degree.”
The U.S. Federal Reserve is seen ramping up its battle with 40-year excessive inflation with a supersized 100 foundation factors rate hike this month after a grim inflation report confirmed value pressures accelerating.
The Fed rate hike is anticipated to observe the same shock transfer by the Bank of Canada on Wednesday.
Investors additionally flocked to the greenback, typically seen as a secure haven asset. The greenback index hit a 20-year excessive on Wednesday, which makes oil purchases dearer for non-U.S. consumers.
Worries of COVID-19 curbs in a number of Chinese cities to rein in new circumstances of a extremely infectious subvariant have additionally stored a lid on oil prices.
China’s day by day crude oil imports in June sank to their lowest since July 2018, as refiners anticipated lockdown measures to curb demand, customs information confirmed on Wednesday.
U.S. President Joe Biden will on Friday fly to Saudi Arabia, the place he’ll attend a summit of Gulf allies and name for these allies to pump extra oil.
However, spare capability on the Organization of the Petroleum Exporting Countries is working low with most of the producers pumping at most capability and doubt exists as to how a lot further Saudi Arabia can carry into the market shortly.
Data from the U.S. Energy Information Administration additionally level to slackening demand with product provided slumping to 18.7 million barrels per day, its lowest since June 2021. Crude inventories rose, bolstered by one other huge launch from strategic reserves.
“We had all the time anticipated demand to wrestle within the wake of sky-high product prices,” mentioned Caroline Bain, chief commodities economist at Capital Economics in a word.
“But the scale of the weekly drop means that it might be a one-off and should, at the very least partially, reverse within the coming weeks,” Bain added. – Reuters