Oil prices rose on Thursday but were unable to claw back the more than 9% decline during the previous three days as demand concerns in major consumers overrode signals that the U.S. may pause its interest rates increases.
Brent futures rose 50 cents, to $72.83 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 28 cents to $68.88 a barrel.
Prices have plunged this week amid concerns about the U.S. economy, signs of weak manufacturing growth in China, the world’s largest oil importer, and after the U.S. Federal Reserve raised interest rates to their highest since 2007 on Wednesday, potentially capping economic growth in the near-term.
Still, with some positive growth in the U.S. services sector and expectations that output cuts by major producers that started this month will limit supply, investors and analysts are buying back into the market.
While the Fed raised interest rates by a quarter of a percentage point as expected, it signaled it may pause further increases to give officials time to assess the fallout from recent bank failures and wait for clarity over the dispute over raising the U.S. debt ceiling.
The collapse of the third U.S. bank since March, spurred by their inability to manage rising interest rates, has also weighed overall financial markets.
The Organization of the Petroleum Exporting Countries (OPEC)and allies including Russia, a group known as OPEC+, started voluntary output cuts of around 1.16 million barrels per day at the beginning of this month and those are expected to support the market going forward into the summer peak demand period.