Home Editor's Picks Oil rises after steep losses, but recession fears limit gains

Oil rises after steep losses, but recession fears limit gains


Oil rises after steep losses, but recession fears limit gains By Investing.com

Breaking News


Commodities 23 minutes ago (Jan 24, 2023 09:45PM ET)

(C) Reuters.

By Ambar Warrick

Investing.com– Oil prices rose on Wednesday, recovering a measure of sharp losses from the prior session, although fears of a global recession and signs of another major build in U.S. inventories kept gains limited.

Crude prices have fallen into a holding pattern over the past month, with markets constantly weighing the prospect of slowing global economic growth against signs of an improvement in Chinese demand this year.

While the world’s largest oil importer relaxed anti-COVID measures earlier this month, a raft of weakening economic indicators in other major oil markets, particularly the U.S. and Europe, have sapped optimism over crude markets.

Brent oil futures rose 0.4% to $86.68 a barrel, while West Texas Intermediate crude futures rose 0.5% to $80.53 a barrel by 21:22 ET (02:22 GMT). Both contracts plummeted nearly 2% on Tuesday.

Crude’s sharp fall was triggered by data showing that U.S. manufacturing activity shrank in January for the seventh straight month, ramping up concerns over slowing activity in the world’s largest oil consumer.

Data from the American Petroleum Institute also pointed to a bigger-than-expected 3.4 million barrel build in U.S. crude inventories in the week to January 20. The reading usually heralds a similar trend in government data, which is due later in the day. Analysts are forecasting a 0.9 million barrel build in U.S. inventories, which have grown more than expected for the past four weeks.

Growth in U.S. inventories indicates that the market is expected to remain flush with supply in the near-term, which is negative for oil prices. But a sustained drop in distillate inventories has shown that some facets of crude demand in the country remain strong.

Focus is now on U.S. fourth quarter GDP data due on Thursday, which is expected to provide more clarity on the path of the world’s biggest economy.

Markets are also growing uncertain over the timing of a Chinese economic recovery this year. While the country scaled back most anti-COVID restrictions, it is also grappling with its worst yet COVID-19 outbreak, which could potentially delay an economic recovery.

Reports this week also suggested that the Organization of Petroleum Exporting Countries is not considering any cuts to supply at its next meeting, which is expected to keep global markets flush with crude in the near-term. Investment bank JPMorgan (NYSE:JPM) said in a recent note that crude supply is likely to surpass demand in 2023, which will limit any major upside in prices.

Oil rises after steep losses, but recession fears limit gains

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2023 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News