China demand versus Fed rate hikes keeps oil steady

Oil prices were largely unchanged in early Asian trade on Thursday as traders weighed optimism over China’s demand outlook against the possibility of further interest rate hikes from global central banks.

Brent crude futures were up 1c at $82.71 per barrel at 0121 GMT while US crude futures fell 4cto $77.24.

The market was bolstered by projections from the International Energy Agency seeing Chinese oil demand recovering in 2023 after a 400,000 barrels per day (bpd) contraction in 2022. The agency raised its 2023 oil demand growth estimate to 1.7-million bpd for a total of 101.6-million bpd.

Road and air traffic in China have rebounded sharply in the past month, data suggests.

Oil prices have also been supported by an outage of TC Energy’s Keystone pipeline, which ordinarily ships 620,000 bpd of Canadian crude to the US.

Officials said the cleanup from the leak that caused the outage would take several weeks at the least.

The US Federal Reserve raised its benchmark overnight interest rate by 50 basis points on Wednesday, a downshift from the 75-basis-point hikes it had delivered at its previous four policy meetings. The central bank signalled that more interest rate hikes are to be expected.

US crude oil stockpiles also rose by more than 10-million barrels last week, the most since March 2021, buoyed by releases from the Strategic Petroleum Reserve and as refiners reduced activity

Reuters