Horizontal trend in oil

Oil prices are trading sideways on signs of a new U.S. inventory drawdown, as well as concerns about Chinese demand and ongoing uncertainty about the Fed’s timeline for rate cuts. Brent crude traded below $85 a barrel after falling more than 3% in the past three sessions, while U.S. crude was above $81. The American Petroleum Institute said crude inventories fell by 1.92 million barrels last week, with a decline also seen at the key Cushing, Oklahoma, hub, according to people familiar with the figures. Total holdings fell by more than 12 million barrels the week before. Data on Wednesday from China, still the world’s largest oil importer, underscored the country’s economic challenges as ex-factory prices fell and deflationary pressures persisted. Oil has remained comfortably higher for the year, with gains supported by OPEC+ supply cuts and expectations of easing U.S. monetary policy. As policymakers watch for signs of weakness in the labor market, they want to see more evidence that inflation is slowing before they lower borrowing costs, Powell said Tuesday.