Oil prices were steady in Asian trade on Tuesday, supported by hopes a solid economic rebound in China will drive up fuel demand, offsetting worries about further U.S. interest rate hikes potentially hurting demand in the world’s biggest economy.
Brent crude futures for April , due to expire on Tuesday, gained 14 cents to $82.59 per barrel by 0443 GMT. The more active May contract firmed 17 cents to $82.21 per barrel.
U.S. West Texas Intermediate (WTI) crude futures rose 21 cents to $75.89 a barrel.
Brent and WTI futures were both on track for monthly losses of around 2.2% and 3.8% respectively, with WTI likely to hit a four-month streak of declines.
Expectations of a demand recovery in China underpinned gains, with the market awaiting key data over the next two days. Economists polled by Reuters expected factory activity in the world’s second-largest economy grew in February.
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“China’s economic recovery will drive its demand for commodities higher with oil positioned to benefit the most,” JPMorgan analysts in a client note.
JPMorgan’s oil analysts maintained their 2023 average price forecast on Brent crude futures at $90 per barrel.
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However the threat of more U.S. rate increases following stronger-than-expected new orders for core U.S.-manufactured capital goods in January, capped gains, with U.S. Federal Reserve Governor Philip Jefferson saying inflation for services remained “stubbornly high.”
“The stronger than expected inflation numbers raised concerns about further hikes in interest rates, which has already curbed demand in the U.S.,” ANZ analysts said in a client note.
The market will be looking out for the latest U.S. oil stocks data due from the American Petroleum Institute industry group on Tuesday and the government’s Energy Information Administration on Wednesday for further demand indicators.
A preliminary Reuters poll showed analysts expected crude stocks grew by 400,000 barrels in the week to Feb. 24, which would mark the tenth consecutive week of builds.
