Investing.com — Oil prices fell Thursday, overturning earlier gains, as traders digested weak U.S. labor data, weak Chinese inflation numbers as well as mixed inventory numbers.
By 09:15 ET (14:15 GMT), futures traded 2.1% lower at $71.06 a barrel, while the contract fell 1.7% to $75.14 a barrel.
The crude market has dropped substantially in the last month, with both benchmarks down over 12% as rising global interest rates continued to drive recessionary fears, likely weighing on the demand for crude.
These worries about slowing growth received a boost Thursday after data showed the number of Americans filing new claims for increased 22,000 to 264,000 for the week ended May 6, the highest reading since October 2021.
Additionally, U.S. rebounded modestly in April, rising 0.2% on the month, while on an , the PPI increased 2.3%, the smallest year-on-year rise since January 2021.
The oil benchmarks had received a boost on Wednesday after the Energy Information Administration reported a sharp drop in U.S. and inventories, suggesting fuel demand was climbing as the important U.S. summer driving season approaches.
However, U.S. rose by almost 3 million barrels last week, defying forecasts for a reduction, and compared with the previous week’s drawdown of 1.3 million barrels.
Weighing on the market Thursday was disappointing Chinese inflation data, as the barely grew in April, while the shrank to the lowest levels since 2020.
This follows on from the country’s contracting sharply in April, while rose at a slower pace than expected, according to data received earlier this week, suggesting a slower than expected economic recovery from the largest crude importer in the world.
However, there was some good news on this front as the Organization of the Petroleum Exporting Countries raised its forecast for Chinese oil demand growth in 2023 following the relaxation of the country’s COVID-19 curbs, in its latest monthly report.
The cartel lifted its world oil demand forecast for 2023 by 2.33 million barrels per day, a relatively small 2.3%.
“Minor upward adjustments were made due to the better-than-expected performance in China’s economy, while other regions are expected to see slight declines, due to economic challenges that are likely to weigh on oil demand,” OPEC said.
The group added “as further debt-related challenges may arise, geopolitical uncertainties persist and inflation continues. In addition, the U.S. debt ceiling issue has so far not been resolved, a matter that could have economic consequences.”
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