Oil prices rebounded slightly on Thursday, but failed to return the more than 9% decline in the previous three days as demand concerns from large consumers invalidated signals that the US could halt rate hikes.
Brent futures were up 17 cents, or 0.2%, to $72.50 a barrel as of 0257 GMT. From Friday to Wednesday’s close, Brent fell more than 9% and fell as low as $71.28 in the early hours of Thursday.
West Texas Intermediate (WTI) crude rose 2 cents to $68.62 a barrel. WTI fell almost 11% from Friday to Wednesday’s close and fell as low as $63.64 in the early hours of Thursday.
Prices fell this week amid signs of weak manufacturing growth in China, the world’s largest oil importer, and the US, the world’s largest oil user, raised interest rates to the highest since 2007 on Wednesday, threatening economic growth.
Still, investors and analysts are buying back, with some positive growth in the US services sector and expectations that production cuts from major producers that began this month will limit supply. Oil is starting to find some support as all the bad supply and demand news is priced in.
The bankruptcy of the third US bank since March due to its inability to manage rising interest rates keeps the overall financial markets under pressure.
The Fed raised interest rates by a quarter point as expected, signaling it may halt further hikes to assess the consequences of recent bank failures and wait for the dispute over raising the U.S. debt ceiling to become clear.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, launched a voluntary production cut of around 1.16 million barrels per day earlier this month, which is expected to support the market during peak demand next summer.
It looks like OPEC+ will be under pressure as they proved that they can meet their production cut quotas and be in a position to signal further cuts to come if needed.
The ECB is preparing to raise interest rates for the 7th time in the fight against inflation. Investors are waiting for developments from the European Central Bank, which will raise interest rates at its seventh consecutive meeting on Thursday.
Demand concerns in China continue to weigh on the market, especially after Thursday’s private sector survey showed factory activity unexpectedly dropped in April due to soft domestic demand.