Oil Prices Move Little in Anticipation Of More China CuesFebruary 27, 2023
Oil prices kept to a tight range on Monday amid persistent concerns over high inflation and rising U.S. interest rates, while traders awaited more cues on demand from key Chinese economic readings this week. Readings on China’s Purchasing Mangers’ Index (PMI) for February are due on Wednesday. Indicators for January had portrayed a somewhat mixed economic recovery in the world’s largest crude importer, even as it relaxed most anti-COVID measures earlier this year. Wednesday’s data is expected to show that the manufacturing sector remained in contraction territory in February. The sector was hit the hardest by three years of COVID lockdowns, and is also facing a slowdown in foreign demand. Brent oil futures rose 0.1% to $82.90 a barrel, while West Texas Intermediate crude futures rose 0.2% to $76.45 a barrel by 20:50 ET (01:50 GMT). While a recovery in China is forecast to drive global crude demand to record highs this year, markets have grown uncertain over the timing of such a recovery, given that the country is still struggling with high COVID-19 cases. Laggard inflation and weak manufacturing activity have also sown doubts over an immediate rebound in China.
Mixed Signals On Demand, Coupled With Fears of Rising Interest.
rates and slowing economic growth saw oil prices trade lower so far this year. The market’s biggest source of anxiety has been a strong dollar and a hawkish Federal Reserve, following stronger-than-expected U.S. inflation prints. A strong reading on the Personal Consumption Expenditures index for January furthered this notion. Focus this week is also on U.S. nonfarm payrolls data due on Friday, which is expected to show resilience in the jobs market. The dollar steadied near a two-month high against a basket of currencies on Monday. Markets fear that rising interest rates could batter economic activity and slow crude demand across the globe. A series of weekly U.S. inventory builds have also raised concerns over slowing demand in the world’s largest oil consumer. Still, the prospect of tighter global supply supported crude prices in recent sessions. Media reports suggested that Russia’s planned supply cuts will be deeper than initially announced, as the world’s third-largest oil producer copes with Western price caps on its crude exports.