Oil prices recover after three-day plunge; demand worries linger
OPEC Secretary General Haitham Al Ghais said finger-pointing and misrepresenting the actions of OPEC and OPEC+ was "counterproductive."
Oil prices recovered slightly on Thursday but were unable to claw back the more than 9% decline in the previous three days as demand concerns in major consumers overrode signals that the U.S. may pause its interest rates increases.
Brent futures 17 cents, or 0.2%, to $72.50 a barrel by 0257 GMT. Since Friday, however, Brent has dropped more than 9% and earlier on Thursday fell to as low as $71.28.
U.S. West Texas Intermediate (WTI) crude CLc1 rose 2 cents, to $68.62 a barrel. WTI dropped almost 11% from Friday to Wednesday's close and earlier on Thursday fell to as low as $63.64.
Prices have plunged this week amid signs of weak manufacturing growth in China, the world's largest oil importer, and after the U.S., the world's biggest oil user, raised interest rates to their highest since 2007 on Wednesday, which threatens future economic growth there.
Still, with some positive growth in the U.S. services sector and expectations that output cuts by major producers that started this month will limit supply, investors and analysts are buying back into the market.
"Oil is starting to find some support as all the bad supply and demand news has been priced in," said Edward Moya, an analyst at OANDA.
While the Fed raised interest rates by a quarter of a percentage point as expected, it signaled it may pause further increases to give officials time to assess the fallout from recent bank failures and wait for clarity over the dispute over raising the U.S. debt ceiling.
The collapse of the third U.S. bank since March, spurred by their inability to manage rising interest rates, has also weighed overall financial markets.
The Organization of the Petroleum Exporting Countries (OPEC)and allies including Russia, a group known as OPEC+, started voluntary output cuts of around 1.16 million barrels per day at the beginning of this month and those are expected to support the market going forward into the summer peak demand period.
"It seems like OPEC+ will have pressure to finally show they can meet those production cut quotas and possibly be in a position to signal more cuts are coming," Moya said.
Investors are also awaiting developments from the European Central Bank, which is set to raise interest rates for the seventh meeting in a row on Thursday.
Chinese demand concerns continue to weigh on the market especially after a private sector survey showed on Thursday that factory activity unexpectedly dipped in April due to softer domestic demand.
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