NYMEX crude oil looks at $74.51
International oil prices held steady on Thursday (March 9), despite a larger-than-expected decline in U.S. crude inventories and bullish demand expectations in China, but concerns that more aggressive rate hikes by the Federal Reserve would slow economic growth and dent oil consumption limited the rebound in oil prices. NYMEX crude oil looked at $74.51.
At 16:10 Beijing time, NYMEX crude oil futures fell 0.10% to $76.56/barrel; ICE Brent crude futures fell 0.07% to $82.60/barrel.
International oil prices recorded their biggest one-day drop since early January on Tuesday (March 7) and continued their decline on Wednesday (March 8). Federal Reserve Chairman Jerome Powell has previously said that a higher-than-expected rate hike may be needed in response to recent strong economic data.
Suvro Sarkar, chief energy analyst at DBS Bank, said: “Oil prices are still affected by Powell’s hawkish tone recently, and the possibility of raising interest rates by 50 basis points instead of 25 basis points is becoming more and more likely. On the one hand, the Fed is raising interest rates to fight inflation. On the other hand, China’s demand is improving, and oil prices will fall into a tug of war.”
Although China’s crude oil imports fell 1.3% year-on-year in the first two months of 2023, analysts pointed to the acceleration in imports in February as a sign that fuel demand is rebounding following authorities lifted COVID-19 containment measures.
Meanwhile, data from the U.S. Energy Information Administration (EIA) on Wednesday showed that U.S. crude inventories unexpectedly fell by 1.694 million barrels last week, ending a 10-week streak of growth. Analysts had expected an increase of 39.5 barrels. But adding to demand concerns, official data showed U.S. gasoline inventories fell by 1.134 million barrels, less than analysts’ forecast for a 1.863 million-barrel drop, while distillate stockpiles unexpectedly rose by 138,000 barrels, compared with forecasts for a 1 million-barrel drop.
Edward Moya, senior analyst at OANDA, said in a report that despite the EIA inventory report showing that crude oil inventories fell for the first time this year, the uncertainty of crude demand in the short term will prevent oil prices from rising until we see clearer signs of recovery in Chinese demand. Looks like it will remain under heavy selling pressure.
On the daily chart, NYMEX crude oil showed repeated bottoming following approaching $70 in December last year. Oil prices started a new wave of short-term decline from US$80.94, which has fallen below the 38.2% target of US$76.96, and further tested the 61.8% target of US$74.51.
