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Oil prices moved little in Asian trade on Wednesday as anticipation of a slew of indicators on U.S. monetary policy and the economy kept sentiment tepid, although signs of shrinking U.S. inventories pointed to tighter supplies.
Data from the American Petroleum Institute showed that U.S. crude inventories shrank by a slightly bigger-than-expected 2.68 million barrels in the week to April 14. The figure heralds a similar trend in government data due later in the day, and signals tightening supplies as fuel demand picks up due to improving weather.
Oil markets were also cheered by stronger-than-expected Chinese economic growth data, which furthered the notion that a recovery in China will drive oil demand to record highs this year. Travel demand in the country also appeared to be closing in on pre-COVID levels.
But resurgent fears of rising interest rates and slowing economic growth kept sentiment on edge.
Brent oil futures steadied at $84.71 a barrel, while West Texas Intermediate crude futures fell 0.1% to $80.86 a barrel by 22:12 ET (02:12 GMT). Both contracts ended largely flat on Tuesday, despite the positive Chinese data.
Uncertainty over the Federal Reserve was the key weight on oil markets, before a string of speakers from the central bank this week. The Fed’s Beige Book report is also due later on Wednesday, and is expected to provide more cues on how the central bank views the current state of the economy.
A rally in oil markets wound down in recent sessions as the prospect of higher interest rates and worsening economic conditions in the West saw investors question just how much demand will recover this year.
Uncertainty over the Fed also rattled markets. Fed Fund futures prices show that markets are pricing in an 85% chance that the Fed will hike rates in May, along with a small possibility that the bank hike rates further in June.
This notion strengthened the dollar in recent sessions, weighing on commodities priced in the greenback.
Still, crude prices were trading marginally higher for the year, having rallied sharply in April following a surprise production cut by the Organization of Petroleum Exporting Countries.
