Oil prices are fluctuating on jitters about the Chinese economy and US interest rate developments

An aerial view shows a crude oil tanker at an oil terminal off Waidiao Island in Zhoushan, Zhejiang province, China, January 4, 2023. China Daily via REUTERS/File Photo Licensing Rights

SING`ORE, Aug 17 (Reuters) – Oil prices were choppy on Thursday after falling over the past three sessions, with a somber undertone on fears that slowing growth in China and possible further rate hikes in the US will hamper fuel demand in the US the world ‘s two largest economies will weaken .

Brent crude futures were up 8 cents, or 0.1%, at $83.53 a barrel by 02:45 GMT after initially falling 0.5%. U.S. West Texas Intermediate (WTI) Crude was unchanged at $79.38.

“China’s economic worries and broader risk-off sentiment on Wall Street weighed on oil markets, while a strong USD added downward pressure,” said Tina Teng, analyst at CMC Markets.

Alongside US oil inventories data, traders will also closely monitor Chinese economic data and government policies as oil producers in the country may start ramping up output to gain market share amid production cuts by the OPEC+ group, he said teng

Missed payments by a leading Chinese investment products trust company and a fall in property prices have heightened concerns that the deepening crisis in China’s property sector is dampening what little momentum remains in the economy.

The People’s Bank of China unexpectedly cut interest rates this week for the second time in three months, but analysts fear it may not be enough to stem the economy’s downward spiral.

Minutes of the US Federal Reserve’s July meeting released on Wednesday also weighed on oil prices as they showed that central bank officials have not given any clear indication of suspending rate hikes as they continue to prioritize fighting inflation.

Higher interest rates increase borrowing costs for businesses and consumers, which could slow economic growth and reduce oil demand.

“Crude prices will struggle here as we have bearish sentiment in the world’s two largest economies,” said Edward Moya, an analyst at OANDA.

Reporting by Katya Golubkova; Edited by Sonali Paul and Muralikumar Anantharaman

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Sudarshan is currently reporting on the evolving energy landscape in Asia as the region seeks to strike a balance between ensuring reliable electricity supplies and fighting climate change. In his previous avatar, he covered world trade in the sanctions era, human rights abuses, labor movements, environmental abuses and natural disasters in India for six years. During his nine years as a Reuters correspondent, he has sought to bring a global perspective to small-town issues. Contact: +91 9810393152