- Another Fed rate hike more likely; Asia refiner margins weak
- WTI above $75 a barrel after closing slightly higher Thursday
According to Bloomberg article published on April 28, 2023, oil headed for a sixth straight monthly decline — its longest run of such losses in more than eight years — as slowdown concerns in the US and Asia weighed on the outlook.
Investors see US inflation continuing to accelerate, bolstering expectations the Federal Reserve will be forced to keep raising rates, making a recession more likely, which would dent energy consumption. While West Texas Intermediate rose above $75 a barrel Friday, they are also set for a second weekly loss.
Falling profit margins for refiners in Asia are signaling demand weakness in the biggest oil-importing region, but China’s recovery is starting to take hold. Top processor Sinopec said the nation’s rebound will boost demand growth for refined oil products by more than 10% this year.
Crude has been whipsawed in April, rising sharply after the Organization of Petroleum Exporting Countries and its allies announced an output cut, but then giving up all those gains as the outlook deteriorated. Supply from Russia has remained surprisingly resilient despite sanctions and a price cap, and China’s rebound has been slower than some had anticipated.
Traders will be on the lookout for first-quarter earnings from oil majors including Exxon Mobil Corp. and Chevron Corp. — due later Friday — which could provide commentary on the outlook for the global market.
“Gains returned following two days of heavy selling amid mixed economic signals,” said Charu Chanana, a market analyst for Saxo Capital Markets Pte in Singapore. “Focus today will be on company earnings from oil majors.”
