Yahoo Finance Crude oil lower on growth concerns, rising U.S. inventories
By Peter Nurse
Investing.com -- Oil prices retreated Thursday, snapping a three-day rally, after a surprise rise in U.S. crude stockpiles and with the Federal Reserve highlighting global growth concerns.
By 09:15 ET (13:15 GMT), U.S. crude futures traded 0.2% lower at $70.77 a barrel, while the Brent contract fell 0.2% to $76.57 a barrel.
The benchmarks had posted gains the first three days this week, having hit their lowest since late 2021 earlier this week.
The Fed hiked interest rates as expected on Wednesday, but downgraded its GDP outlook for the year, expecting the U.S. economy to grow 0.4% this year, down from previous expectations of 0.5%.
The U.S. central bank also hinted that it might pause its rate-hike campaign due to the turmoil in the banking sector, implying concerns that smaller regional banks could curb their lending to preserve cash, hitting economic activity.
The Bank of England also raised its key interest rates by another 25 basis points earlier Thursday to a new 15-year high of 4.25%.
Also weighing on sentiment was the surprise increase in the official U.S. crude stockpiles, which rose by over 1 million barrels to their highest in nearly two years last week.
Still, losses haven’t been extreme as a weak dollar has provided support.
The dollar index fell to a seven-week low after the Fed meeting, making commodities that are denominated in dollars, like crude, cheaper for foreign buyers.
There are signs of strong demand in Asia as the Chinese economy recovers from the hit to activity caused by its COVID-Zero policy.
Goldman Sachs expects oil demand from China, the world's biggest oil importer, to top 16 million barrels per day. It forecast Brent would reach $97 a barrel in the second quarter of 2024.
Similarly, consultancy firm Wood Mackenzie said China will drive at least 40% of an increase in global crude demand this year.
On the supply side, attention will turn to the next meeting of OPEC’s monitoring committee — which can recommend a change in output — on April 3.
That said, the group will probably wait for financial markets to calm before deciding whether it needs to react to cutting production once more, said Energy Aspects.
“It would be premature for OPEC+ to take action without first understanding what the risks are,” the consultancy group said.
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