Oil moves little as markets await more Fed cues
2023.05.01 22:09
© Reuters.
Investing.com– Oil prices kept to a tight range in early Asian trade on Tuesday as markets hunkered down before a widely expected Federal Reserve interest rate hike and more cues on U.S. monetary policy due later in the week.
Crude markets saw increased volatility before the conclusion of a two-day Fed meeting on Wednesday, where the central bank is widely expected to .
Weaker-than-expected Chinese also dented crude markets, as a post-COVID economic rebound in the world’s largest oil importer appeared to be running out of steam. China’s – considered a bellwether for the economy- slipped back into contraction territory in April.
The weak data, coupled with fears of rising interest rates and worsening economic growth, ramped up concerns that crude demand may not be as strong in 2023 as initially expected. This notion also battered oil markets over the past two weeks.
fell 0.1% to $79.30 a barrel, while were flat at $75.65 a barrel by 21:14 ET (01:14 GMT). Both contracts settled lower after a volatile session on Monday.
Focus is now squarely on the conclusion of a Fed meeting on Wednesday. While a rate hike is largely priced in, markets are uncertain whether the central bank will signal an end to its rate hike cycle, given that it has offered no indication that it plans to pause.
Key indicators on the U.S. labor market, particularly data for April, are also on tap this week, and are largely expected to factor into the Fed’s future decisions on interest rates.
Concerns over slowing demand have been a major weight on oil prices in recent weeks, as weak data and renewed ructions in the banking sector fueled increased fears of a global economic slowdown this year. The also firmed ahead of the Fed meeting, further pressuring crude markets.
This saw oil prices completely reverse strong gains made on the back of a surprise production cut by the Organization of Petroleum Exporting Countries and allies (OPEC+) in early-April.
The is expected to follow the Fed’s example in hiking rates later this week, heralding tighter monetary conditions.
Still, crude supply is expected to tighten in the coming weeks, especially as the OPEC+ cut goes into effect, and as U.S. consumption improves amid better weather.
