Crude oil edges higher after hefty losses this week

Investing.com -- Oil prices stabilized Thursday after three days of heavy selling on concerns that slowing economic growth in the major consuming countries will severely hit demand.

By 09:30 ET (13:30 GMT), U.S. crude futures traded 0.1% higher at $68.67 a barrel, while the Brent contract rose 0.4% to $72.62 a barrel.

The European Central Bank earlier Thursday followed the Federal Reserve’s lead by hiking interest rates by 25 basis points, continuing its prolonged monetary policy tightening.

Although the move marked a slowdown from a recent string of more aggressive 50-point hikes, the Governing Council warned that the outlook for inflation continues to be "too high for too long," implying more rate increases ahead.

This tightening comes amid signs of slowing growth in both Europe and the U.S., while turmoil in the U.S. banking sector threatens to further hit economic activity.

Even China, the world’s largest crude importer, offered up disappointing manufacturing activity data earlier in the week, suggesting the Asian giant’s recovery from its self-imposed COVID mobility restrictions will be uneven.

“Investors seem to be getting increasingly nervous about the macro outlook and its implications for oil demand,” said analysts at ING, in a note.

The market’s weakness suggests that the Organization of the Petroleum Exporting Countries’ plan to support prices by another voluntary output cut of just over 1 million barrels per day, which started at the beginning of May, is not working.

“Breaking below US$70/bbl would be a concern for OPEC+, and so talk of additional cuts would likely grow if we trade down towards this level” for a prolonged period, added ING.

Additionally, it is around these levels that the U.S. administration is likely to start refilling its strategic petroleum reserves, which could provide some support.

Elsewhere, U.S. oil inventories continued to shrink, official data released by the Energy Information Administration on Wednesday showed, falling just over one million barrels last week.

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