HOUSTON: Oil prices held steady on Tuesday as upbeat economic data in No. 2 oil consumer China offset wider concerns that possible increases to US interest rates could dampen growth in the top consuming country.
Brent crude was flat at $84.76 a barrel by 11:15 a.m. ET (1515) GMT, while US West Texas Intermediate was 12 cents, pr 0.2% higher at $80.95.
“Ideas are building for another interest rate hike next month, which could place a damper on demand,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Crude was also pressured by the Iraq federal government and Kurdistan Regional Government (KRG) taking a step towards a resumption in northern oil exports from the Turkish port of Ceyhan after they were halted last month.
Earlier in the session, oil found support from figures showing that China’s economy grew by a faster than expected 4.5% in the first quarter while oil refinery throughput rose to record levels in March.
“As things stand, it’s all systems go in China, much to the relief of those betting on higher oil prices,” said Stephen Brennock of oil broker PVM.
But the prospect of another increase to US interest rates, which has been supporting the US dollar, remained a drag on sentiment. Traders expect the US Federal Reserve to raise rates by 25 basis points at its May meeting.
“The next step may depend on global growth and whether the economy can weather the recent storm, particularly in the US, where tighter credit could significantly weigh on growth for the rest of the year,” said Craig Erlam of brokerage OANDA, referring to the oil price outlook.
The dollar eased on Tuesday after earlier gains. A stronger dollar makes commodities priced in the US currency more expensive for buyers holding other currencies.
Coming into focus on Tuesday will be the latest snapshot of US inventories. Analysts expect US crude inventories to fall by about 2.5 million barrels and also forecast declines in gasoline and distillates.
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