© Reuters

By Ambar Warrick 

Investing.com– Oil prices were muted on Thursday, cutting short a three-day rally after data highlighted growing economic cracks in major crude importer China, while markets also speculated over whether the OPEC’s last meeting for the year will result in a supply cut. 

Chinese manufacturing activity- a bellwether for the economy- weakened substantially in November, and surveys showed this week. This largely offset optimism over the country’s in two major cities, following widespread protests. 

Beijing has also given no indication that it plans to scale back the lockdown measures that weighed heavily on China’s economy this year, denting its appetite for crude. 

were steady around $86.83 a barrel, while were largely unchanged at $80.50 a barrel by 21:14 ET (02:14 GMT). 

Focus is now on an upcoming (OPEC+) on Sunday. Markets are split over the cartel’s capacity to cut supply further, after it slashed production by 2 million barrels per day in October.

The cartel recently signaled that it would consider recent weakness in oil markets during its upcoming meeting, but gave no direct signals that it will cut production. 

Still, crude prices rallied sharply in recent sessions after data showed shrank substantially more than expected in the prior week. The reading showed that the U.S. government was now scaling back its drawdowns from the Strategic Petroleum Reserve, which likely heralds tighter oil supply in the world’s largest economy.

But while demand among refiners remained strong, a continued build in showed that consumer demand for fuel remained weak amid high inflation and rising interest rates.

Weakness in the also benefited oil markets this week, after signaled that the central bank will slow its pace of interest rate hikes in the coming months.

But Powell warned that will likely peak at higher-than-expected levels if inflation proves to be stubborn. 

The Fed’s showed that the U.S. economy is losing momentum, while the outlook is paved with “increased pessimism,” heralding more uncertainty over oil demand in the country. 

The OPEC also recently forecast weakening crude demand in the near-term due to increasing economic uncertainty fueled by rising interest rates and high inflation. 

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