Oil prices were little changed on Tuesday as upbeat economic data in No. 2 oil consumer China offset concerns that possible increases in U.S. interest rates could dampen growth in the top consuming country.
Brent crude settled 1 cent, or 0.01%, higher at $85.25 a barrel, while West Texas Intermediate crude futures closed up 3 cents, or 0.04% at $80.86.
China’s economy grew by a faster-than-expected 4.5% in the first quarter while oil refinery throughput rose to record levels in March, data showed.
“The big picture with China’s growth still suggests a market that is under supplied,” said Phil Flynn, an analyst at Price Futures Group.
But the prospect of another U.S. interest rate hike remained a drag on sentiment. Traders expect the Federal Reserve to raise rates by 25 basis points at its May meeting.
The U.S. central bank most likely has one more interest rate rise in store to fight inflation, Atlanta Fed President Raphael Bostic said.
“The next step may depend on global growth and whether the economy can weather the recent storm, particularly in the U.S., where tighter credit could significantly weigh on growth for the rest of the year,” said Craig Erlam of brokerage OANDA, referring to the oil price outlook.
Crude was also pressured by the Iraq federal government and Kurdistan Regional Government (KRG) taking a step toward a resumption in northern oil exports from the Turkish port of Ceyhan after they were halted last month.
The dollar eased on Tuesday after the upbeat China data. A stronger dollar makes commodities priced in the U.S. currency more expensive for buyers holding other currencies.
Most traders, however, believe that the recent crude price rally is in need of a correction, said Dennis Kissler, senior vice president of trading at BOK Financial.
Crude prices posted gains for the last four weeks, a streak not seen since June 2022.
Late in the afternoon, market sources citing American Petroleum Institute figures said U.S. crude oil stocks fell by about 2.68 million barrels, while fuel inventories also fell last week.
Analysts forecast a drawdown of 1.1. million barrels in crude stockpiles last week, as well declines in gasoline and distillates.
The U.S. government will release its stockpile data on Wednesday morning.