March 26, 2023
Oil and expectations | March 2
Hot Forex Review

Oil and expectations | March 2

The Oil price still wanders between different data and economic outlooks. While the prospect of more demand from China helps the bulls, concerns over a possible recession hold them back from moving further. Last week’s Russian threat to cut 500K bpd raised market tension and concerns, which usually favor the bulls.

Oil prices rose this week after returning from under $74 last week. The market was under pressure last week as global economic growth concerns intensified and the US dollar strengthened. While the prospect of a strong recovery in Chinese demand has recently raised prices, recession concerns remain, and aggressive rate hikes stifle economic activity, limiting the energy demand.

According to the data published on Wednesday, March 1, Chinese business activity data pointed to a robust economic recovery in the world’s largest oil importer. Manufacturing PMI in February raised to 52.6, up from 50.1 in January. Moreover, Non-Manufacturing PMI at 56.3 exceeds the 55.0 estimated and 54.4 in January. With Caixin Manufacturing PMI at 51.6 (Up from 49.2 in January), China’s economic activity expanded at its fastest pace in over a decade in February. However, these optimist data can also help the hawkish fans among major central banks’ policymakers.

As every Tuesday and Wednesday, we had API and EIA reports. API Weekly reports of US Crude Oil Stock show a 6.203M barrel raise in the week ended February 24, which was much more than 0.440M estimates but far less than the 9.895M raise of the week before. Later on Wednesday, official data also confirmed almost the same changes. According to the US Energy Information Administration (EIA), Crude Oil Inventories increased by 1.165M in the same week, which was more than 0.457M expectations but much less than the 7.648M increase of the week before that.

While inventories rose for a tenth consecutive week and the US Oil exports reached a record high, gasoline stockpiles fell. These inventory data show some uncertainty over crude supply in the world’s largest oil consumer. These data are mixed enough to limit bears and bulls at the current range between 74 and 84 US Dollars. Moreover, moving above or under these mentioned levels needs a more substantial reason; otherwise, we can expect prices around mentioned numbers for now.

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