LONDON—Oil prices were stable on Thursday as the market weighed the prospect of tight supply against possible recession in the United States, the world’s largest oil consumer.
Brent crude fell 7 cents, or 0.08 percent, to $87.26 a barrel by 0935 GMT. U.S. West Texas Intermediate (WTI) was unchanged at $83.26.
Both benchmarks had risen 2 percent on Wednesday to their highest in more than a month as cooling U.S. inflation spurred hopes that the U.S. Federal Reserve will stop raising interest rates.
However, minutes from the Fed’s last policy meeting indicated that banking sector stress could tip the economy into recession, which would weaken U.S. oil demand.
“Global economic growth is fragile and inflationary pressure could easily become elevated again,” said Tamas Varga of oil broker PVM.
The market is still reeling from the shock decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, to increase its production cut targets.
While the executive director of the International Energy Agency expects the move to tighten supply in the second half of the year and push oil prices higher, the International Monetary Fund on Tuesday highlighted the risk this poses to global economic expansion.
For every 10 percent rise in the price of oil, IMF models show a 0.1 percentage point reduction in growth and a 0.3 percentage point increase in inflation, said IMF chief economist Pierre-Olivier Gourinchas said.
Investors will be looking for direction from the OPEC monthly oil market report due at 1130 GMT on Thursday.
Markets on Wednesday shrugged off a small build in U.S. crude oil stocks, attributing it in part to a release of oil from the U.S. emergency reserve and lower exports at the start of the month.
The Biden administration plans to refill the U.S. Strategic Petroleum Reserve soon and hopes to do it at lower oil prices, U.S. Energy Secretary Jennifer Granholm said on Wednesday.
