Oil prices were volatile on Thursday after falling in the last three sessions on concerns that slowing growth in China and possible rate hikes in the US will weaken fuel demand in the world’s two largest economies.
Brent crude futures were flat at $83.45 a barrel as of 0645 GMT after initially falling 0.5%. West Texas Intermediate crude (WTI) was down 8 cents to trade at $79.30.
China’s economic worries and broad risk aversion on Wall Street weigh on oil markets, while a strong US dollar adds to the downward pressure.
Traders will be keeping a close eye on US oil inventory data, as well as Chinese economic data and government policy movements. Oil producers in the US may start to increase production to gain market share despite the production cuts of the OPEC+ group.
In China, concerns have risen that the economy’s slow momentum is being under pressure due to the signs of a leading Chinese trust firm’s failure to make payments for investment products, falling home prices, and a deepening real estate crisis.
China’s central bank unexpectedly cut policy rates for the second time in three months this week, but analysts worry that this may not be enough to stop the economy’s downward spiral.
The US Federal Reserve’s failure to give strong signals on Wednesday that interest rate hikes would be halted while continuing to prioritize the fight against inflation weighed on oil prices.
Higher interest rates increase borrowing costs for businesses and consumers, which can slow economic growth and reduce oil demand.
Crude oil prices will continue to struggle to find support as there is a downward trend in the world’s two largest economies.
