Breaking News
Investing Pro 0
⚠ New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Oil rises after steep losses, but recession fears limit gains

Commodities Jan 25, 2023 03:49
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
-1.30%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-2.01%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Ambar Warrick

Investing.com -- Oil prices rose on Wednesday, recovering a measure of sharp losses from the prior session, although fears of a global recession and signs of another major build in U.S. inventories kept gains limited.

Crude prices have fallen into a holding pattern over the past month, with markets constantly weighing the prospect of slowing global economic growth against signs of an improvement in Chinese demand this year.

While the world’s largest oil importer relaxed anti-COVID measures earlier this month, a raft of weakening economic indicators in other major oil markets, particularly the U.S. and Europe, have sapped optimism over crude markets.

Brent oil futures rose 0.4% to $86.68 a barrel, while West Texas Intermediate crude futures rose 0.5% to $80.53 a barrel by 21:22 ET (02:22 GMT). Both contracts plummeted nearly 2% on Tuesday.

Crude’s sharp fall was triggered by data showing that U.S. manufacturing activity shrank in January for the seventh straight month, ramping up concerns over slowing activity in the world’s largest oil consumer.

Data from the American Petroleum Institute also pointed to a bigger-than-expected 3.4 million barrel build in U.S. crude inventories in the week to January 20. The reading usually heralds a similar trend in government data, which is due later in the day. Analysts are forecasting a 0.9 million barrel build in U.S. inventories, which have grown more than expected for the past four weeks.

Growth in U.S. inventories indicates that the market is expected to remain flush with supply in the near-term, which is negative for oil prices. But a sustained drop in distillate inventories has shown that some facets of crude demand in the country remain strong.

Focus is now on U.S. fourth-quarter GDP data due on Thursday, which is expected to provide more clarity on the path of the world’s biggest economy.

Markets are also growing uncertain over the timing of a Chinese economic recovery this year. While the country scaled back most anti-COVID restrictions, it is also grappling with its worst yet COVID-19 outbreak, which could potentially delay an economic recovery.

Reports this week also suggested that the Organization of Petroleum Exporting Countries is not considering any cuts to supply at its next meeting, which is expected to keep global markets flush with crude in the near-term. Investment bank JPMorgan said in a recent note that crude supply is likely to surpass demand in 2023, which will limit any major upside in prices.

Oil rises after steep losses, but recession fears limit gains
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email