Oil dips on China outlook while investors await Fed clues - Reuters

Oil dips on China outlook while investors await Fed clues | Reuters

Oil dips on China outlook while investors await Fed clues
Summary Companies China's growth outlook down from last year's target Fed chair speaks to Congress this week U.S. February jobs report also in focus

LONDON, March 6 (Reuters) - Oil prices fell on Monday after China set a lower than expected target for economic growth this year at about 5% and as investors awaited U.S. Federal Reserve Chair Jerome Powell's testimony this week.

Brent crude futures were trading down 60 cents, or 0.7%, at $85.23 a barrel by 1520 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 47 cents, or 0.6%, at $79.21.

"Crude remains in a tug-of-war between optimism over Chinese reopening and nervousness over a hawkish Fed hurting the U.S. economy," said Vandana Hari, founder of oil market analysis provider Vanda Insights.

China's closely watched growth outlook, announced on Sunday, was lower than last year's 5.5% target for gross domestic product (GDP) growth. GDP grew last year by only 3%. Policy sources had told Reuters the target could be set as high as 6% for 2023.

Premier Li Keqiang on Sunday said the foundation for stable growth in China needed to be consolidated, that insufficient demand remained a pronounced problem and the expectations of private investors and businesses were unstable.

"Safe to say markets were surprised by the decision to target only 5% growth this year while signaling no significant stimulus to turbo-charge the economic recovery," said Craig Erlam, senior market analyst at OANDA.

At the same time, oil prices are likely to be affected by increases to interest rates across the world as global central banks tighten policy over fears of rising inflation.

Traders have started factoring in rate hikes but are hoping for smaller increases than last year.

The Fed's Powell will testify to Congress on Tuesday and Wednesday, when he is likely to be quizzed on whether larger increases are needed in the world's biggest oil-consuming country.

Future U.S. rate hikes are also likely to depend on what the February payrolls report reveals on Friday, followed by the February inflation report next week.

Over the weekend, European Central Bank President Christine Lagarde said it was "very likely" the bank would raise interest rates this month to keep a lid on inflation.

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