Oil prices muted after bruising week as economic concerns grow
2023.04.20 21:26
© Reuters.
By Ambar Warrick
Investing.com– Oil prices moved in a tight range on Friday after falling sharply this week as soft economic readings and fears of rising interest rates pushed up uncertainty over a recovery in demand this year.
Crude prices were set to close the week down over 6%, snapping four straight positive weeks. Recent losses also saw oil prices largely reverse strong gains made on the back of an unexpected supply cut by the Organization of Petroleum Exporting Countries earlier in April.
Signs of overheated inflation in and the dialed up expectations that the Bank of England and the European Central Bank will continue to hike interest rates, while a slew of Federal Reserve officials called for more rate hikes to curb relatively high inflation.
This pushed up concerns that higher interest rates will stymie economic growth this year, largely hampering crude demand despite a recovery in Chinese consumption.
rose 0.2% to $80.92 a barrel, while fell 0.2% to $77.22 a barrel by 21:15 ET (01:15 GMT). Both contracts were trading at three-week lows.
A softer-than-expected reading on , coupled with signs of a , fed into fears that economic growth in the world’s largest oil consumer was cooling. An unexpected build in U.S. also showed that demand at the pump remained weak.
But despite weakening economic growth, several Fed officials called on more rate hikes to curb high inflation. Markets are also pricing in an 85% chance that the bank will hike rates by 25 basis points in May, along with a slim chance for a similar hike in June.
While the general consensus is still for a pause in June, Fed officials also called for rates to remain higher for longer- a scenario that bodes poorly for economic growth.
Philadelphia Fed President Patrick Harker said on Thursday that U.S. interest rates will likely rise further and remain there for longer in order to tackle inflation.
The recovered from 15-month lows this week, also pressuring oil markets.
Signs of economic gloom largely offset positive signals from China, where grew more than expected after the country relaxed most anti-COVID measures earlier in the year.
But an economic recovery in the world’s largest oil importer has been largely uneven this year, due to an underperforming manufacturing sector.
