Investing.com — Oil prices fell slightly in Asian trade on Thursday as major importer China enacted more interest rate cuts amid worsening economic conditions, while markets continued to digest mixed signals from the Federal Reserve.
China cuts rates further to support economic recovery
China’s central bank cut rates on its medium-term loans for the first time in 10 months, following a short-term rate cut earlier this week as the government struggles to shore up economic growth.
Weak readings from the world’s largest oil importer continued to pour in, with data on Thursday showing that and grew less than expected in May.
While the interest rate cuts are aimed at supporting the Chinese economy, the weak data further undermined bets that a recovery in China will drive oil demand to record highs this year.
futures fell 0.1% to $73.11 a barrel, while futures fell 0.1% to $68.20 a barrel by 22:39 ET (02:39 GMT).
Both contracts were nursing steep losses for the week, amid persistent concerns over slowing global crude demand and overheated supply.
Overnight, Wall Street analysts further scaled back their expectations for a price recovery this year, with JPMorgan Chase & Co joining its peers in slashing its year-end price forecasts.
While oil demand has somewhat improved this year, supply has remained largely robust thanks to shipments from Iran and Russia. This has cast doubts over expectations that oil markets will tighten substantially in 2023, despite recent production cuts by the Organization of Petroleum Exporting Countries.
In another sign of bloated supply, data showed grew substantially more than expected in the week to June 9, with a rise in raising questions over a summer season recovery in U.S. fuel demand.
Fed offers mixed signals, markets left uncertain
Oil prices also retreated after the Federal Reserve on Wednesday, but forecast at least two more rate hikes this year as it moves against high inflation.
While the pause offered some positive signals to crude markets, the prospect of interest rates rising further pointed to more economic headwinds this year, which oil bulls fear could stymie crude demand.
The also rallied in Asian trade after the Fed meeting, providing more pressure for oil markets.
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