Storage tanks are seen at the Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. REUTERS/Benoit Tessier
- Dollar weakens on hopes Fed will relent on big rate hikes
- U.S. crude exports surge to record, inventories rise
- Western officials finalising Russia oil-price cap plan
LONDON, Oct 27 (Reuters) – Oil steadied on Thursday following a rally of nearly 3% in the previous session, as concern over slack demand in China balanced optimism from record U.S. crude exports and sign that recession concerns are abating.
Global investors dumped Chinese assets early this week on fears about growth, with the economy beset by a zero-COVID policy, a property crisis and falling market confidence. China is the world’s biggest energy consumer.
Brent crude rose 23 cents, or 0.2%, to $95.92 a barrel by 0810 GMT. U.S. West Texas Intermediate (WTI) crude fell 17 cents, or 0.2%, to $87.74.
“Concerns that China’s muddled economic policies may continue under President Xi Jinping’s growing power weighed on sentiment,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
Oil’s gain on Tuesday was prompted by figures showing record U.S. crude exports, a hopeful sign for demand, even as crude stocks rose, as well as weakness in the U.S. dollar stemming from hopes that interest-rate hikes may become less aggressive.
“It appears that recession concerns have abated lately but continuously betting on healthy economic growth will prove foolhardy,” said Tamas Varga, an analyst at oil broker PVM.
The dollar was near a more than one-month low against a basket of currencies on the hopes that the U.S. Federal Reserve will shift to less aggressive interest rate increases.
A weaker dollar makes oil cheaper for holders of other currencies and tends to reflect greater investor appetite for risk assets.
Crude has slumped on economic concerns after surging earlier this year after Russia invaded Ukraine, with Brent coming close to its all-time high of $147 in March.
U.S. and Western officials are finalising plans to impose a cap on Russian oil prices amid a warning from the World Bank that any plan will need active participation of emerging market economies to be effective.