ISLAMABAD
Oil prices remained almost flat on Wednesday, as investors weighed China’s efforts to stimulate its economy as well as waited for Federal Reserve Chair Jerome Powell’s briefing to the Congress on the US economy.
As of 1330 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, shed $0.07 (-0.09 percent) to reach $75.83 a barrel. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.02 (-0.03 percent) to $71.18 a barrel.
Similarly, the price of Russian Sokol jumped by $0.13 (+0.19 percent) to $67.04. Arab Light prices witnessed an increase of $0.38 (+0.48 percent) to reach $78.87 a barrel. Similarly, the price for Opec Basket went up by $1.69 (+2.28 percent) to $75.89. The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
China, the world’s second-largest economy and top crude importer, cut two market-based benchmark lending rates this week, but the loosening of the monetary policy was less aggressive than what some analysts were expecting. China’s economy, which rebounded after the lifting of Covid-19 restrictions at the start of 2023, lost momentum in May because of weak retail sales and manufacturing as well as a slowdown in the property sector.
China’s much-awaited economic stimulus has also been underwhelming, further weighing on oil prices and the prospects of oil demand, analysts say. China’s demand outlook is crucial for the global market, given that the bulk of global demand growth this year is expected to be driven by China.
Significantly weaker Chinese demand would also mean that the global oil balance would not be as tight as currently expected over the second half of 2023.
US Federal Reserve Chairman Jerome Powell is expected to give his semi-annual report to Congress on Wednesday and Thursday after the central bank decided to pause raising interest rates earlier this month. Powell’s comments on the US economy will be closely watched by the market on Wednesday afternoon and on Thursday for clues about the chances of the US managing a soft landing after the recent rate hikes.
