Oil prices fluctuated in a narrow range on Thursday as the market weighed mixed U.S. economic signals and prospects for a Chinese demand recovery with a build in U.S. crude stocks and stronger dollar.
Brent crude futures rose 10 cents, or 0.12%, to $85.48 a barrel by 1538 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.25%, at $78.79.
Federal Reserve Bank of Cleveland President Loretta Mester said the central bank could become more aggressive with rate rises in the future if inflation surprises to the upside, after the latest reading on inflation showed prices remaining stubbornly high. But Mester does not expect the U.S. to fall into recession.
A higher U.S. dollar also weighed on oil. A stronger dollar can cut oil demand, making crude more expensive for holders of other currencies.
“Brent failed again to move above the 100-day moving average this week,” said UBS analyst Giovanni Staunovo.
The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks, while WTI has ranged between $72 and $83 since December.
“Oil prices are very choppy at the moment, with traders having a lot to take in,” OANDA analyst Craig Erlam said in a note, pointing to Russia’s 500,000 bpd cut to oil production in March, a strong Chinese economic recovery and an uncertain global economic outlook.
The prospect of a Chinese demand recovery has contributed to bullish sentiment.
China will account for almost half of global oil demand growth this year after relaxing its COVID-19 curbs, the International Energy Agency (IEA) said on Wednesday.
The Paris-based watchdog echoed similar views from OPEC, which this week raised its 2023 global oil demand growth forecast on Chinese demand growth.
On the supply side, the market is keeping a close eye on Russian oil production.
Russian oil exports were down in January by only 160,000 bpd from levels before the Ukraine conflict, but about 1 million bpd of production will be shut in by the end of the first quarter, the IEA said.
