Oil extended its longest run of losses this year ahead of the release of Federal Reserve minutes that may provide further clues on the path forward for monetary tightening in the U.S.
West Texas Intermediate fell near US$75 a barrel after declining for a fifth session on Tuesday. The prospect of more aggressive interest-rate hikes from the Fed to quell inflation have kept a lid on prices, despite increasing evidence of a robust recovery in China following the end of COVID Zero.
Oil’s lackluster start to the year has dented some early optimism that resurgent Chinese demand would buoy prices. Morgan Stanley on Wednesday became the latest bank to trim its forecasts, arguing that the market will be oversupplied in the first quarter, and in balance in the second quarter before moving into a smaller-than-expected deficit in the second half.
For now, concerns over a U.S. slowdown and China’s rebound from virus curbs have trapped futures within a range of around US$10 a barrel as the bearish and bullish narratives clash, with a renewed supply disruption in Kazakhstan on Wednesday failing to move the needle. “Growth concerns dominate, with fears of an ongoing hawkish Fed to slow down U.S. inflation,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. Brent for April settlement fell 1.4 per cent to US$81.89 a barrel.
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