NEW YORK: Oil prices steadied on Thursday on mixed data about the state of the US economy and looming sanctions on Russian oil products.
Brent crude futures fell 5 cents to $82.79 a barrel by 12:39 a.m. ET (1739) GMT, while West Texas Intermediate crude (WTI) rose 3 cents to $76.44.
Both benchmarks plunged more than 3% overnight after US government data showed a large build in oil stocks.
While new orders for US manufactured goods rose broadly in December, orders for industrial equipment and other machinery fell, according to the latest data from the Commerce Department.
“It was highlighting more slowing in the economy, particularly on the industrial side, which is a negative for petroleum,” said John Kilduff, a partner at Again Capital.
A rebound in the dollar index, which hit a nine-month low earlier in the session on softer US Federal Reserve rate hike bets, also weighed on oil prices. A stronger greenback makes dollar-priced oil more expensive for holders of other currencies.
The Fed raised its target interest rate by a quarter of a percentage point on Wednesday, but continued to promise “ongoing increases” in borrowing costs as part of its battle against inflation. “Inflation has eased somewhat but remains elevated,” the US central bank said in a statement that marked an explicit acknowledgement of the progress made in lowering the pace of price increases from the 40-year highs hit last year.
While inflation appears to have slowed in major economies, the response of central banks and the speed of reopening from COVID-19 lockdowns is uncertain.
“Investors have become less confident in the strength of the outlook; something we could see change repeatedly in this first quarter due to the lack of visibility on interest rates and China’s COVID transition,” said Craig Erlam, senior market analyst at OANDA.
Helping to keep oil from moving lower was a European Union ban on Russian refined products is set to take effect on Feb. 5, potentially dealing a blow to global supply.
EU countries will seek a deal on Friday on a European Commission proposal to set price caps on Russian oil products after postponing a decision on Wednesday because of divisions among member states, diplomats said.
The European Commission proposed last week that from Feb. 5 the EU apply a price cap of $100 a barrel on premium Russian oil products such as diesel and a $45 per barrel cap on discounted products such as fuel oil.
Meanwhile an OPEC+ panel endorsed the producer group’s current output policy at a meeting on Wednesday, leaving production cuts agreed last year unchanged amid hopes of higher Chinese demand and uncertain prospects for Russian supply.
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