Oil prices edged lower on Thursday after a large build in U.S. crude inventories but continued to trade in a narrow range as hopes for a Chinese demand recovery remained in focus.
Brent crude futures fell 36 cents, or 0.42%, to $85.02 a barrel by 1042 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 29 cents, or 0.37%, at $78.30.
Prices were pressured by last week’s larger than expected build in U.S. crude oil stocks. Stocks rose to the highest level since June 2021, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
The build was largely because of a data adjustment, which analysts said muted the impact on oil prices.
“Brent failed again to move above the 100-day moving average this week. Together with a large crude build in the U.S., prices remain under downward pressure,” said UBS analyst Giovanni Staunovo.
The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks while WTI has ranged between $72 and $83 since December.
“Oil prices are very choppy at the moment, with traders having a lot to take in,” OANDA analyst Craig Erlam said in a note, pointing to Russia’s 500,000 bpd cut to oil production in March, a strong Chinese economic recovery and an uncertain global economic outlook.
China will account for almost half of global oil demand growth this year after relaxing its COVID-19 curbs, the International Energy Agency (IEA) said on Wednesday.
On the supply side, the market is keeping a close eye on Russian oil production.
“It is open for interpretation how the country’s oil production will be affected by international sanctions or to what extent the invader would go to use oil as leverage,” said Tamas Varga of oil broker PVM.
Russian oil exports were down in January by only 160,000 bpd from levels before the war in Ukraine, but about 1 million bpd of production will be shut in by the end of the first quarter, the IEA said.
The market will look for economic clues from a host of Fed and ECB officials due to speak on Thursday.