ALBAWABA – Oil prices stabilized on Thursday after three days of fluctuation as concerns over an economic slowdown in China and another interest rate hike in the United States (US) outweighed declining inventories in the US, news agencies reported.
Brent crude futures were flat at $83.45 a barrel by 0645 GMT, according to Reuters, after initially falling 0.5%. Whereas US West Texas Intermediate crude (WTI) was down $0.08 to $79.30 per barrel.
Oil prices remain well above lows hit in June, after Saudi Arabia and Russia reduced supplies, Bloomberg reported.
Saudi Arabia has enacted multiple output cuts in the last six months and has warned it would do whatever is needed to shore up oil prices. Meanwhile, Russia has announced it would cut its market supply and divert its output to its military effort in Ukraine.
In the meantime, US nationwide crude inventories have declined to the lowest level since January after dropping for four of the past five weeks, according to Energy Information Administration figures.
Traders will closely watch Chinese economic data and government policy moves, Reuters reported, in addition to US oil inventory data as American producers may boost output to gain market share. Especially amid production and supply cuts by the members of the Organization of Petroleum Exporting Countries and its allies (OPEC+), CMC Markets analyst Tina Teng told Reuters.
"China's economic concerns and broad risk-off sentiment on Wall Street pressed on the oil markets, with a strong USD adding to the downside pressure at the same time," she said.
On the other hand, minutes of the US Federal Reserve's July meeting, released on Wednesday, also weighed on oil prices.
Fed officials did not give strong indications about pausing rate hikes, as they continued to prioritise the battle against inflation.
Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand. It also makes oil more expensive for countries and traders settling payments in other currencies.
