Oil futures fell Thursday, with prices eyeing their first loss in six sessions after weaker-than-expected import data from China.
The testimony Tuesday by Jerome Powell, Chairman of the Federal Reserve, to the Senate Banking Committee also highlighted how oil prices are being pushed. Powell suggested that the central bank might accelerate the pace at which monetary tightening is being done.
The potential for more aggressive interest rates hikes fed worries about a recession which could dull demand for energy.
West Texas Intermediate crude for April delivery CL00, -2.25% CL.1, -2.25% CLJ23, -2.25% fell $1.05, or 1.3%, to $79.41 a barrel on the New York Mercantile Exchange.
May Brent crude BRN00, -1.91% BRNK23, -1.91%, the global benchmark, was down $1.27, or 1.5%, at $84.91 a barrel on ICE Futures Europe. Prices for the global benchmark, as well as WTI oil posted gains in each of the last five trading sessions.
Back on Nymex, April gasoline RBJ23, -2.25% fell 1% to $2.7684 a gallon, while April heating oil HOJ23, -2.73% dropped 1.5% to $2.8458 a gallon.
April natural gas NGJ23, +2.57% rose 1.8% to $2.618 per million British thermal units.
'Tight global supply, war, sanctions on Russia oil and the rising Chinese and global demand tilt the balance for higher oil prices in the medium run,' said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a daily note.
'But higher energy prices mean higher inflation, and higher inflation means tighter monetary policies which, in return, increase the global recession odds, and could weigh on oil prices,' he said.
Federal Reserve Chairman Jerome Powell's testimony to Congress this week was expected to offer some hints on the path for interest rates. Powell is testifying Tuesday to the Senate Banking Committee and to the House Financial Services panel on Wednesday.
On Tuesday, Powell pledged to continue the battle against inflation and left the door open for accelerating the pace of monetary tightening, if necessary.
Meanwhile, crude lost ground after data showed China's imports fell 10.2% during the first two months of the year, compared with a 7.5% decline in December and the 5.1% drop expected by the economists. China's customs bureau releases trade data for the first two months of the year together to eliminate distortions from the Lunar New Year holiday, which fell in January this year.
Analysts at ING wrote in a note that the data showed that crude oil imports remained weak despite refiners increasing their purchases in advance of the Lunar New Year holiday.
They also noted that oil imports decreased 1.3% year-over-year to 10.44 million barrels per day in January and February. Fuel exports increased 74% year after year, and imports only rose 14%.
'Supply constraints on Russian refined products appear to have supported demand for Chinese fuel products. Looking ahead, China's crude oil imports could recover over the next quarter as industrial activity picks up and refiners rebuild their stocks,' the analysts wrote.