Oil prices managed to stabilize on Thursday, recovering from their lowest levels since late 2021 earlier this week, as encouraging U.S. employment data balanced out negative indicators from Federal Reserve Chair Jerome Powell, who underscored risks in the banking sector and rising U.S. crude inventories.
On Wednesday, Powell warned the banking blip could lead to a credit crunch, which could have "significant" repercussions on an economy Federal Reserve officials predicted would decelerate further this year compared to previous estimates.
The Bank of England joined the Federal Reserve and the Swiss National Bank in raising interest rates on Thursday, taking action against inflation amid the ongoing turbulence in the global banking system this month.
Oil prices were weighed down as U.S. crude oil inventories unexpectedly increased, reaching their highest levels in almost two years, according to the latest Energy Information Administration (EIA) data.
For the week ending March 17, crude inventories swelled by 1.1 million barrels to 481.2 million, the most significant amount since May 2021. This contrasted with analysts' predictions in a Reuters poll, which had anticipated a decrease of 1.6 million barrels.
Conversely, the number of Americans filing new claims for unemployment benefits slightly declined last week from an already historically low level, indicating that recent financial market volatility has not yet impacted the economy.
The U.S. dollar dipped to a seven-week low against a basket of other currencies, offering some support to oil prices as a weaker dollar renders oil more affordable for holders of other currencies.
In another positive development, Goldman Sachs reported on Thursday that China, the world's largest oil importer, continued to experience surging demand for commodities, surpassing 16 million barrels per day.
Goldman Sachs also projected that Brent crude would reach $97 per barrel in the second quarter of 2024.
By Michael Kern for Oilprice.com
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