NEW YORK: Oil prices fluctuated in a narrow range on Thursday as the market weighed mixed US economic signals and prospects for a Chinese demand recovery with a build in US crude stockpiles.
Brent crude futures was unchanged at $85.38 a barrel by 1:03 p.m. EST (1803 GMT). US West Texas Intermediate crude (WTI) was up 7 cents at $78.66.
“The complex is chopping around so far today after being jostled by yesterday’s weekly EIA (Energy Information Administration) and monthly IEA (International Energy Agency) reports amidst conflicting views regarding future interest rate trends and potential effect on recession,” said Jim Ritterbusch of consultancy Ritterbusch and Associates.
While US data suggested the US jobs market remained robust, a gauge of manufacturing in the mid-Atlantic region unexpectedly plunged.
Federal Reserve Bank of Cleveland President Loretta Mester said the central bank could become more aggressive with rate rises in the future if inflation surprises to the upside, after the latest reading on inflation showed prices remaining stubbornly high. But Mester does not expect the US to fall into recession.
The dollar briefly climbed to a six-week peak against basket of currencies after the US data, weighing on oil, as a strong dollar makes the greenback-denominated commodity more expensive for holders of other currencies.
“Brent failed again to move above the 100-day moving average this week,” said UBS analyst Giovanni Staunovo.
The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks, while WTI has ranged between $72 and $83 since December.
The Energy Information Administration (EIA) on Wednesday reported US crude oil stockpiles last week rose to their highest level since June 2021 after a larger-than-expected build.
“Oil prices are very choppy at the moment, with traders having a lot to take in,” OANDA analyst Craig Erlam said in a note, pointing to Russia’s 500,000 barrel-per-day cut to oil production in March, a strong Chinese economic recovery and an uncertain global economic outlook.
The prospect of a Chinese demand recovery has contributed to bullish sentiment.
China will account for almost half of global oil demand growth this year after relaxing its COVID-19 curbs, the International Energy Agency (IEA) said on Wednesday.
The Paris-based watchdog echoed similar views from the Organization of the Petroleum Exporting Countries, which this week raised its 2023 global oil demand growth forecast on Chinese demand growth.
On the supply side, Saudi Energy Minister Prince Abdulaziz bin Salman said the current OPEC+ deal to cut oil production targets by 2 million barrels per day (bpd) would be locked in until the end of the year, adding he remained cautious on Chinese demand forecasts.
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