LONDON, Jan 3 (Reuters) – Oil prices edged lower on Tuesday in volatile trade as weak demand data from China and a gloomy economic outlook weighed.
Brent crude futures were down 46 cents, or 0.54%, at $85.45 a barrel by 1[ads1]017 GMT. US West Texas Intermediate crude was down 38 cents, or 0.47%, at $79.88.
Both contracts rose over $1 and Brent fell $1 in earlier trade.
“Brent and WTI have recovered nearly 15% from their lows of a few weeks ago as traders continue to price in stronger Chinese demand,” said Craig Erlam, senior market analyst at OANDA.
“The outlook remains highly uncertain, which should ensure that oil prices remain highly volatile,” Erlam added.
The Chinese government has raised export quotas for refined oil products in the first batch for 2023. Traders attributed the increase to expectations of weak domestic demand, as the world’s largest crude oil importer continued to battle waves of COVID-19 infections.
In further bearish news, China’s factory activity shrank in December as rising COVID-19 infections disrupted production and weighed on demand after Beijing largely lifted anti-virus curbs.
Adding to the gloomy economic outlook, IMF Managing Director Kristalina Georgieva said on Sunday that the US, Europe and China – the main engines of global growth – all slowed at the same time, making 2023 tougher than 2022 for the global economy.
The market will be watching for indications from the US Federal Reserve’s December policy meeting on Wednesday. The Fed raised interest rates by 50 basis points (bps) in December after four consecutive increases of 75 bps each.
Also on the radar is US December payroll data on Friday, which is expected to show the labor market remains tight.
Reporting by Florence Tan and Trixie Yap in Singapore; Additional reporting by Chen Aizhu and Muyu Xu; editing by David Evans
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