Oil steady on U.S. stock build, Chinese demand

Oil prices fluctuated in a narrow range on Thursday as it weighed a large build in U.S. crude inventories and hopes for a Chinese demand recovery.

Brent crude futures were flat on the day at $85.38 a barrel by 1252 GMT. U.S. West Texas Intermediate (WTI) crude futures were up 7 cents, or 0.09%, at $78.66.

Prices have come under some pressure from last week's larger than expected build in U.S. crude oil stocks. Stocks rose to the highest level since June 2021, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]

The build was largely because of a data adjustment, which analysts said muted the impact on oil prices.

"Brent failed again to move above the 100-day moving average this week. Together with a large crude build in the U.S., prices remain under downward pressure," said UBS analyst Giovanni Staunovo.

The Brent benchmark has been swinging within an $80-$90 a barrel range for the past six weeks while WTI has ranged between $72 and $83 since December.

"Oil prices are very choppy at the moment, with traders having a lot to take in," OANDA analyst Craig Erlam said in a note, pointing to Russia's 500,000 bpd cut to oil production in March, a strong Chinese economic recovery and an uncertain global economic outlook.

The prospect of a Chinese demand recovery has contributed to bullish sentiment.

China will account for almost half of global oil demand growth this year after relaxing its COVID-19 curbs, the International Energy Agency (IEA) said on Wednesday.

The Paris-based watchdog echoed similar views from OPEC, which this week raised its 2023 global oil demand growth forecast on Chinese demand growth.

On the supply side, the market is keeping a close eye on Russian oil production.

Russian oil exports were down in January by only 160,000 bpd from levels before the war in Ukraine, but about 1 million bpd of production will be shut in by the end of the first quarter, the IEA said.

The market will look for economic direction from a host of Fed and ECB officials due to speak on Thursday.