Crude oil mixed; U.S. slowdown concerns compete with solid Chinese GDP
By Peter Nurse
Investing.com — Oil prices traded in a mixed fashion Tuesday, as traders digested concerns surrounding the U.S. economic outlook as well as upbeat China’s economic growth data.
By 09:20 ET (13:20 GMT), U.S. crude futures traded 0.1% higher at $80.90 a barrel, while the Brent contract fell 0.1% to $84.69 a barrel.
Economic data released earlier Tuesday showed the U.S. housing market in retreat, hit by the influence of the aggressive rate-hiking cycle by the Federal Reserve.
Housing starts fell 0.8% on the month in March, while building permits dropped 8.8% in the same month.
Yet, despite these signs of the U.S. economy slowing, traders still expect the Federal Reserve to raise rates by 25 basis points at its May meeting.
Also weighed on the crude market was the increased likelihood of a resumption in oil exports from the Turkish port of Ceyhan after they were halted last month.
“Oil flows of around 450Mbbls/d were halted back in late March after the International Chamber of Commerce ruled in favor of the Iraqi government, which claimed that these oil exports via Turkey were unauthorised,” said analysts at ING, in a note.
The crude market had traded higher earlier in the day after data showed that China’s economy grew 4.5% in the first quarter, more than the expected 4% and the previous quarter’s 2.2% growth.
Investors have been banking on growth in the second largest economy in the world to pick up the slack caused by western economies contracting under the weight of aggressive interest rate hikes.
Additionally, data showed that the country’s refiners processed 63.29 million tons of crude in March, up 8.8% on a yearly basis and the highest ever for that particular month.
The International Energy Agency last week forecast record oil demand in 2023, largely predicated on the recovery of the Chinese economy after the lifting of its zero-COVID policy.
The American Petroleum Institute, an industry body, will release its weekly forecast of U.S. crude stocks later in the session, with a drop of around 2.5 million barrels expected.