By Ambar Warrick
Investing.com — Oil prices kept to a tight range on Thursday, nursing two days of steep losses as middling demand cues from China and hawkish signals on U.S. interest rates brewed increasing concerns over more headwinds to crude consumption this year.
Chinese read much weaker than expected for February, while a sharper-than-expected drop in indicated that manufacturing activity – usually a bellwether for the economy – was running well below full capacity.
The reading came on the heels of data that showed China’s oil imports shrank during the January-February period, despite the lifting of anti-COVID restrictions.
The weak readings, coupled with a softer-than-expected GDP target for 2023, hampered bets that an economic rebound in China will drive crude demand to record highs this year.
A potential showdown between the U.S. and the Organization of Petroleum Exporting Countries (OPEC) also kept oil markets on their toes, as a group of bipartisan U.S. Senators said they to pressure the cartel into stopping collusion over oil production and prices. The bill, if passed, could greatly reduce the influence the cartel has over oil prices.
Crude prices fell sharply after Federal Reserve Chair Jerome Powell warned that U.S. interest rates are likely to rise more than market , following recent stickiness in inflation. His comments boosted the dollar, and brewed increasing concerns that high interest rates will stymie economic growth and dent crude demand this year.
The remained pinned at a three-month high on Thursday, keeping oil expensive for international buyers and potentially further hurting demand.
Fears of the Fed saw markets largely look past data showing shrank for the first time in 10 weeks. This, coupled with comments from major oil executives that U.S. production had likely peaked, pointed to some tighter supply in the near-term.
Oil prices are trading lower for the year, amid growing concerns that a global recession will crimp crude demand. Traders have also wound down bets on a swift recovery in Chinese demand, following a swathe of weak economic readings from the country.
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