Monday, March 20, 2023
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Oil steadies as dollar retreats

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By Swati Verma and Rowena Edwards
LONDON (Reuters) – Oil prices steadied after moving close to a three-week low on Tuesday, with U.S. wage growth data and a retreating U.S. dollar bolstering risk sentiment ahead of OPEC and central bank meetings this week.

March Brent crude futures were down 58 cents, or 0.68%, at $84.32 a barrel by 1512 GMT. The March contract expires on Tuesday and the more heavily traded April contract rose by 24 cents, or 0.28%, to $84.74.

U.S. West Texas Intermediate (WTI) crude futures were up 22 cents, or 0.28%, at $78.12.

Brent and WTI earlier touched their lowest prices in almost three weeks on the prospect of further interest rate increases and abundant flows of Russian crude.

But prices steadied after the U.S. dollar pared early gains, with the resulting improvement in risk sentiment also boosting equity markets, said UBS analyst Giovanni Staunovo.

U.S. stock indexes opened higher on Tuesday after wage growth data pointed to easing inflation ahead of the Federal Reserve’s decision on interest rates.

Investors expect the Fed to raise rates by 25 basis points on Wednesday, with increases of half a percentage point by the Bank of England and European Central Bank the following day.

Higher interest rates could slow the global economy and curb demand for fuel, creating oil price uncertainty.

However, there was some oil price support from a Reuters survey showing that analysts expect oil output from the Organization of the Petroleum Exporting Countries (OPEC) to fall in January.

An OPEC panel is likely to recommend keeping the group’s output policy unchanged when it meets at 1300 GMT on Wednesday, delegates told Reuters on Monday.

Further ahead, the oil demand outlook looks supportive as Chinese economic activity recovers while supply remains uncertain because of looming sanctions on Russian refined products, said Ole Hansen, head of commodity strategy at Saxo Bank.

A Reuters survey shows 49 economists and analysts expect Brent crude to average more than $90 a barrel this year, representing the first upward revision since a poll in October, with gains likely to be driven by demand from top consumer China.

China’s official purchasing managers’ index (PMI), which measures manufacturing activity, rose in January from December, according to the National Bureau of Statistics (NBS).

Separately, U.S. crude oil stockpiles are likely to have risen last week, a Reuters poll showed ahead of an American Petroleum Institute report due at 4:30 p.m. ET (2130 GMT) on Tuesday. [EIA/S]

(Reporting by Rowena Edwards and Swati Verma; Additional reporting by Trixie Yap in Singapore; Editing by David Goodman)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

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