Oil edged higher after a three-day drop spurred by concerns over the Chinese economy and the possibility of even tighter US monetary policy.
(Bloomberg) — Oil edged higher after a three-day drop spurred by concerns over the Chinese economy and the possibility of even tighter US monetary policy.
West Texas Intermediate traded near $80 a barrel after shedding more than 4% this week. Worries over top importer China’s post-pandemic recovery have taken center stage, with authorities said to have told state-owned banks to step up currency intervention. The risks in China have hurt appetite for risk assets including commodities.
In the US, Federal Reserve officials remained concerned that inflation would fail to recede and that further interest rate hikes could be needed, according to minutes from the central bank’s July meeting. Higher borrowing costs may hurt energy demand, while supporting gains in the US dollar.
With prices slipping from multi-month highs in recent days, Citigroup Inc. urged investors to sell oil into the winter, given the likelihood of soft demand and ample supply. Futures had previously rallied amid OPEC+ supply cuts and a robust physical market.
“The oil market has been unable to escape broader market concerns following a raft of weaker-than-expected Chinese macro data this week,” said Warren Patterson, head of commodities strategy at ING Groep NV. “However, we remain constructive on oil, given the expectation that fundamentals will continue to tighten due to ongoing supply cuts from OPEC+.”
To get Bloomberg’s Energy Daily newsletter direct into your inbox, click here.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.