Oil prices were steady on Wednesday as investors await the U.S. Federal Reserve’s comments after recent data pointed to the possibility of more interest rates hikes, which may lower economic growth and limit global fuel demand.
Brent crude futures for April delivery were up 2 cents to $83.07 a barrel by 0242 GMT after falling 1.2 per cent on Tuesday. West Texas Intermediate (WTI) crude futures for April were down a cent to $76.35 a barrel. The March WTI contract expired on Tuesday down 18 cents.
The U.S. Fed will release the minutes of its latest meeting on Wednesday, which will give traders a glimpse of how high officials are projecting interest rates will go after recent data showed stronger-than-expected U.S. employment and consumer prices.
Other economic reports from the U.S., the world’s biggest oil consumer, showed some troubling signs however. Sales of existing homes fell in January to their lowest since October 2010, the 12th monthly drop, which is the longest streak since 1999.
“Oil prices came under pressure … as weak economic data raised concerns about demand in advanced economies,” said Daniel Hynes, senior commodity strategist at ANZ Bank, in a note. “Further rate hikes could dampen oil demand.”
Higher interest rates tend to lift dollar prices, making dollar-denominated oil more expensive for holders of other currencies.
Expectations of tighter global supplies and rising demand from China have recently lent support to oil prices. Analysts expect China’s oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries come on stream.
ANZ’s Hynes noted that PetroChina and Unipec, the trading arm of Sinopec, Asia’s biggest oil refiner, have booked 10 supertankers to import oil from the U.S. next month, equal to about 20 million barrels of crude.