Oil stabilizes as ahead of US inflation data

Oil prices stabilized on Thursday, after falling for three days, affected by the renewal of anti-Covid-19 restrictions in China, the largest importer of crude in the world, as well as by traders’ anticipation of US inflation data that may provide indications regarding future interest rate hikes.

By 0534 hrs, Brent crude futures fell two years to 92.63 dollars a barrel. West Texas Intermediate crude futures fell eight cents to $85.75 a barrel.

Brent prices have fallen more than 6 percent this week, while West Texas Intermediate crude has fallen more than 7 percent.

On Thursday, the Chinese city of Guangzhou, the manufacturing center, announced that it had recorded more than 2,000 cases of Covid-19 disease, the third day in which infections exceeded this level in the city’s worst outbreak so far. On Wednesday, the authorities demanded millions of residents to undergo tests for the disease, and imposed a closure on a neighbourhood, while local infections in China reached their highest levels since April 30.

US consumer price index data will be released later on Thursday, and is expected to show a decline in core inflation, monthly and annually. This may prompt the Federal Reserve (the US central bank) to reduce the size of the planned increase in interest rates, which will be considered a positive indicator of economic growth and demand for oil.

The US Energy Information Administration announced that crude stocks increased by 3.9 million barrels last week, bringing stocks to their highest levels since July 2021.

But fuel stocks fell by 900,000 barrels, the lowest since November 2014, while distillate stocks fell by 500,000 barrels.