August 29, 2023 (MLN): Oil prices remained mixed on Tuesday as investors remained concerned over economic growth in China and the expectations of further U.S. interest rate hikes that could dampen fuel demand.
Brent crude is currently trading at $83.78 per barrel, up by 0.10% on the day.
While West Texas Intermediate crude (WTI) is trading at $79.85 per barrel, up by 0.10% on the day.
Investors await key U.S. economic data later this week that will help determine the path of interest rates this year and next. Federal Reserve Chair Jerome Powell on Friday said the U.S. central bank may need to raise rates further to cool stubborn inflation, as Reuters reported.
The CME Fed Watch tool now indicates a 21.5% probability of an interest rate hike in the upcoming FED meeting.
"It may be difficult for oil prices to maintain the strong bull trend (seen) in July at this stage. The U.S. and European economies will face downward pressure in the fourth quarter until interest rates peak," said CMC Markets analyst Leon Li.
"So there might be a concern about demand, which puts pressure on oil prices. And China's economy still hasn't seen a significant improvement. Oil prices may remain volatile at this stage, and further increases in the future may require a rebound in Chinese data."
China's economic recovery has faltered on the back of a worsening property slump, weak consumer spending, and tumbling credit growth, prompting Beijing to cut key policy rates to shore up activity in the world's second-largest economy and oil consumer.
While prices since the start of the third quarter are up about 12% and 13% for Brent and WTI, respectively, following production cuts from OPEC+, the outlook for China's economy continues to remain a concern, said analysts at National Australia Bank in a Tuesday note.
Meanwhile, Tropical Storm Idalia lashed western Cuba on Monday and was almost a hurricane as it headed toward Florida. The storm is likely to cause power outages and could impact crude production on the eastern side of the U.S. Gulf Coast.
This week the focus will also be on the U.S. personal consumption expenditures price index report that is due on Thursday and the August nonfarm payrolls data on Friday.
Copyright Mettis Link News
Posted on: 2023-08-29T12:35:09+05:00
