By Ambar Warrick
Investing.com-- Oil prices moved little on Thursday, keeping to their weekly lows as markets hunkered down before key U.S. inflation data due later in the day, while a worsening outlook for crude demand kept sentiment muted.
London-traded Brent oil futures rose 0.1% to $92.65 a barrel, while U.S. West Texas Intermediate futures rose 0.1% to $87.32 a barrel by 21:21 ET (01:21 GMT). Both contracts are down nearly 6% this week amid hawkish signals from the Federal Reserve and profit taking after a bumper rally last week.
Fears of weakening demand chipped away at prices, as a resurgence in Chinese COVID infections saw investors fearing new lockdowns in the world’s largest crude importer. Chinese trade and inflation data on Friday is expected to provide more cues on this front.
But focus this week is squarely on U.S. CPI inflation data, due later on Thursday. The reading is expected to show that U.S. inflation remained stubbornly high in September, giving the Fed more impetus to keep raising interest rates.
The minutes of the Fed’s September meeting also showed that the central bank has no plans to soften its hawkish stance.
Oil prices have fallen sharply this year on concerns that rising inflation and interest rates will dent economic activity and weigh on crude demand- a trend that is expected to continue in the near-term.
The Organization of Petroleum Exporting Countries on Wednesday cut its 2022 and 2023 oil demand forecasts, citing increased headwinds from slowing economic growth and high inflation. The cartel recently cut daily production by 2 million barrels per day in order to support crude prices.
While the supply cut caused oil prices to rally sharply, concerns over sluggish demand may reverse said gains in the near-term.
Data from the American Petroleum Institute that showed U.S. crude inventories rose by 7 million barrels last week, with an official government reading due today is expected to show a 1.7 million barrel build.
Oil may come under more pressure as the U.S. released more supply from its Strategic Petroleum Reserve- a move the Biden administration threatened after the OPEC supply cut.
But oil prices may also benefit from increased demand during the winter months, especially for heating purposes. Supply disruptions in Russia, due to an escalation in the Ukraine war, could also help prices.