Oil prices slipped on Thursday as expectations that U.S. interest rate cuts could be delayed capped gains, though upbeat Chinese trade data augured well for demand in the world’s top oil importer.
Brent crude futures were down 58 cents or 0.7% to $82.38 a barrel by 1417 GMT, while U.S. West Texas Intermediate crude futures inched down 67 cents or 0.8% to $78.46 a barrel.
Oil prices retreated from near a 2024 high hit on Wednesday after U.S. data showed oil stocks rose less than expected and fuel inventories fell, in a sign of robust demand.
Still, markets were bracing for the likelihood that the U.S. Federal Reserve could delay its first interest rate cut to the second half of this year in a boost to the U.S. dollar, according to a Reuters poll of foreign exchange strategists.
A strong greenback dents demand for dollar-denominated oil among buyers using other currencies.
Fed Chair Jerome Powell said on Wednesday continued progress on inflation “is not assured”, though the U.S. central bank still expects to reduce its benchmark interest rate this year. Meanwhile, China’s import and export growth beat estimates, suggesting global trade is turning a corner in a positive signal for policymakers as they try to shore up economic recovery. China posted a 5.1% rise in imports in the first two months of 2024 from a year earlier to about 10.74 million barrels per day (bpd), customs data showed on Thursday, as crude purchases ramped up to meet fuel sales during the Lunar New Year holiday.
“China’s trade balance data is a positive sign for the oil market’s demand outlook,” Auckland-based independent analyst Tina Teng said.
However, she added that risk-off sentiment dominated financial markets as stocks are retreating on Wall Street.
Data on Wednesday showed crude inventories rose for a sixth week in a row, building by 1.4 million barrels, about two-thirds of the 2.1 million-barrel rise analysts had forecast in a Reuters poll.
Gasoline and distillate stocks fell more than expected, the EIA data also showed.
(Additional reporting by Florence Tan in Singapore and Arathy Somasekhar in Houston Editing by Emelia Sithole-Matarise, Jason Neely and Frances Kerry)