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(Bloomberg) — Oil steadied in Asia as investors weighed on monetary policy expectations and a mixed industry report on US crude inventories.
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WTI futures were trading near $68 a barrel, after closing down 2.4% in the previous session. The European Central Bank said on Tuesday that it probably won’t be able to end the cycle of rate hikes anytime soon, which could be a headwind to the demand outlook.
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The American Petroleum Institute reported that US crude stocks fell last week, but stocks at the main storage hub at Cushing rose, according to people familiar with the numbers. Government data is due later on Wednesday.
The US oil index is down 14% this year and is on track for its first consecutive quarterly decline since 2019, due to a slowing economic recovery from China and big interest rate increases from the US Federal Reserve. Resilient Russian exports added to price pressures.
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However, a series of new data showed unexpected strength in several areas of the US economy – including housing, manufacturing and consumer data – painting a picture of resilience and reducing the likelihood of an imminent US recession.
“A stronger-than-expected batch of US macro data, as we saw yesterday, increases the likelihood of a rate hike by the Fed,” said Warren Patterson, head of commodity strategy at ING Groep NV in Singapore. “Obviously, good news is still bad news when it comes to the oil market.”
Widely watched spreads are weakening, with the three-month spread of the global benchmark Brent benchmark in a given time period dropping on Tuesday. The bearish pattern, which indicates an abundance of supply, widened to the deepest level since December on Wednesday.
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