© Reuters.
Amber Warwick
Investing.com — Oil prices retreated from recent gains on Tuesday ahead of Federal Reserve Chairman Jerome Powell’s speech, but markets are more clear about replenishing US strategic oil reserves this year asked to do
Powell is expected to visit Sweden later today to provide more clarity on the direction of US monetary policy and economic growth. Traders have priced in a higher chance of a Federal Reserve meeting in the coming months, which is expected to primarily benefit oil prices.
However, concerns over slowing US economic growth have tempered optimism for oil markets. This week’s focus will also be on key US data, which is expected to largely factor into monetary policy.
By 21:34 ET (02:34 GMT), futures had fallen 0.7% to $79.22 a barrel and futures had fallen 0.4% to $74.30 a barrel.
Markets were also watching for signals about when the US will start replenishing its large Strategic Petroleum Reserve (SPR) after the Department of Energy rejected an initial bid to replenish its stockpile. .
The government had originally suggested it would start replenishing the SPR from the first quarter of 2023, but rejected initial bids from oil companies on the grounds that oil prices were still too high.
The replenishment of the SPR, currently at near 40-year lows, is expected to act as a buy signal for the oil market.
Crude oil markets have risen in the last two sessions amid growing optimism for China. China recently eased nearly all of its COVID-19 measures and reopened its borders after three years. Markets expect the country’s eventual economic recovery will also spur a significant recovery in oil demand.
In the short term, however, the country is facing its worst COVID-19 outbreak to date, cooling optimism about an immediate economic recovery. Sentiment in the oil market has been subdued in recent weeks as the effects of a sharp monetary tightening from 2022 are felt and concerns about slowing economic growth around the world.
Oil prices get off to dismal start to new year after International Monetary Fund warns recession in several major economies by 2023
