Oil gave up most of its previous gains yesterday, as fears of raising interest rates and slowing demand outweighed the support that prices received from a report showing a larger-than-expected decline in US crude inventories.
Benchmark Brent crude prices have fallen more than 15 percent this year as higher interest rates affected investor appetite, while China’s economic recovery faltered after several months of lower-than-expected consumption and other data.
Brent crude futures rose eight cents, or 0.1 percent, to $72.34 a barrel. While US West Texas Intermediate crude futures fell two years to $67.68 a barrel.
Ole Hansen, head of commodities strategy at Saxo Bank, said, “OPEC cuts helped prevent a further decline. In general, the commodities sector such as crude oil is at risk of faltering amid concerns about growth in China and strong US data pointing to rate hikes.”
Oil rose earlier in the session, supported by data from the American Petroleum Institute, which showed a decrease in US crude stocks by about 2.4 million barrels. Higher interest rates could affect economic activity and demand for oil. European Central Bank President Christine Lagarde said high inflation would require the bank to avoid announcing an end to raising interest rates.
However, some analysts expect tight supplies in the market in the second half of 2023 due, among others, to OPEC+ continuing to cut production as well as Saudi Arabia’s voluntary cut in July.
