Brent reversed the previous day’s gains as fears of the US central bank’s aggressive rate hikes, the global economic slowdown, and the slump in fuel demand prompted investors to sell. Brent crude fell on Tuesday.
Traders are awaiting the minutes of Wednesday’s final Federal Reserve meeting, as data on core inflation raise the risk of interest rates staying higher for longer.
Brent crude was down 96 cents, or 1.1%, at $83.11 a barrel as of 0512 GMT. West Texas Intermediate crude (WTI) futures for March, which expire on Tuesday, were unchanged at $76.34 a barrel.
WTI futures did not settle on Monday due to a public holiday in the United States. The currently most active April WTI contract is trading at $76.57 a barrel, up 2 cents.
Brent has been trading in the trading range of $78 to $88 a barrel since late December. While some investors are profiting on concerns about interest rates in the US, others are counting on the bullish sentiment on hopes for a recovery in demand in China.
Until there are clearer signs of the future direction of US monetary policy and the recovery policy in China, the market will likely move in a narrow range.
With global supply contracting, China’s oil imports reaching a record high in 2023 and demand from India, the world’s third-largest oil importer, all eyes are now on the monetary policy of the US, the world’s largest economy and largest oil consumer.
Some analysts say oil prices could rise in the coming weeks due to insufficient supply and recovery in demand despite increases in US interest rates.
Russia plans to cut oil production by 500,000 barrels per day, or about 5% of its output, in March after the West has set price ceilings on Russian oil and oil products.
Chinese demand for Russian crude oil has returned to levels seen at the start of the war in Ukraine. The West will try to pressure China and India to seek alternative sources that should keep the oil market tight.
