Oil steady amid worry about global slowdown

London — Crude oil prices were steady on Tuesday as the concern about a global economic slowdown and expected build in US oil inventories was offset by the hope of a fuel demand recovery from top importer China.

Brent crude was down 30c, or 0.3%, at $87.89 a barrel by 10.10am GMT. US West Texas Intermediate (WTI) crude fell 35c, or 0.4%, to $81.27.

“The [US] economy still could roll over and some energy traders are still sceptical on how quickly China’s crude demand will bounce back this quarter,” Oanda analyst Edward Moya said in a note.

This week traders are watching for more business data as corporate earnings season gathers momentum, offering clues to the health of economies around the globe.

On the inventory side, US stocks of crude oil and petrol were expected to have risen last week while distillate stocks were forecast to fall, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute, due at 9.30pm GMT on Tuesday, and the Energy Information Administration, due at 3.30pm GMT on Wednesday.

Goldman Sachs analysts expect commodities such as crude oil, refined petroleum products, LNG, and soybeans to rise on the back of a rebound in Chinese demand.

Crude oil prices in physical markets have started the year with a rally on increased buying from China after the relaxation of pandemic controls and on trader concern that sanctions on Russia could tighten supply.

The dollar, meanwhile, hovered near a nine-month low against the euro and gave back recent gains against the yen as traders continued to gauge the risks of US recession and the path for Federal Reserve policy.

A weaker US currency makes dollar-denominated commodities such as oil cheaper for buyers using other currencies.

Investors have piled back into petroleum futures and options at the fastest rate for more than two years as concerns over a global business cycle downturn have eased, though flash purchasing managers index (PMI) data due on Tuesday is expected to show a contraction.

Reuters