Brent oil slips as growth fears offset China demand hopes

Brent oil slipped in a volatile session on Tuesday as persistent concerns about global economic growth outweighed supply curbs and prompted investors to take profits on the previous day’s gains.

The focus in the wider financial market is firmly on the release on Wednesday of the minutes of the U.S. Federal Reserve’s latest meeting, after recent data raised the risk of interest rates remaining higher for longer.

Global benchmark Brent crude was down 44 cents, or 0.5%, at $83.63 a barrel by 1435 GMT. U.S. West Texas Intermediate crude for March, which expires on Tuesday, was up 32 cents at $76.66.

“Markets are very choppy after a very slow start to the week and crude is no different,” said Craig Erlam of brokerage OANDA.

“While China’s recovery could lift oil prices over the coming months, global concerns are weighing, so we aren’t quite seeing it being fully priced in.”

The market rallied, with Brent briefly turning positive, after better than expected business activity surveys in Europe and the UK pointed to a less gloomy European economic outlook than previously feared.

On Monday oil prices rose by more than 1% on optimism over Chinese demand that analysts expect to rebound this year after COVID-19 restrictions were scrapped. The U.S. crude contract did not settle on Monday because of a public holiday in the United States. As a result, the weekly American Petroleum Institute report on U.S. inventories will be out on Wednesday rather than the usual Tuesday.

Signs of tighter supply also lent prices some support.

Russia plans to cut oil production by 500,000 barrels per day, or about 5% of its output, in March after the West imposed price caps on Russian oil and oil products over the invasion of Ukraine.

Russia is part of the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies, which agreed in October to cut oil production targets by 2 million bpd until the end of 2023.

(Reporting by Alex LawlerAdditional reporting by Sudarshan Varadhan in Singapore and Yuka Obayashi in TokyoEditing by Jason Neely, David Goodman and Susan Fenton)