<a href="https://www.thenationalnews.com/business/energy/2023/06/20/why-strong-china-demand-and-opec-cuts-are-not-pushing-oil-prices-higher/" target="_blank">Oil prices were steady </a>on Wednesday as investors weighed China’s easing of its monetary policy rate and potential additional efforts to stimulate its economy. Brent, the benchmark for two thirds of the world’s oil, was trading 0.40 per cent higher at $76.20 a barrel at 12.26pm UAE time, while West Texas Intermediate, the gauge that tracks US crude, was up 0.49 per cent at $71.54 a barrel. US Federal Reserve Chairman Jerome Powell is expected to give his semi-annual report to Congress on Wednesday after the central bank decided to <a href="https://www.thenationalnews.com/business/economy/2023/06/14/federal-reserve-interest-rates-pause/" target="_blank">pause raising interest rates</a> earlier this month. “He will likely stress that more work is required to push back against inflation even as it has slowed substantially in the US,” said Edward Bell, senior director of market economics at Emirates NBD. “Powell may also face questioning on whether the Fed will need to quickly cut rates if economic conditions start to worsen, particularly in the labour market.” Higher interest rates could slow the global economy and dampen crude demand. The Fed increased interest rates by a combined 500 basis points since March 2022. China, the world’s second-largest economy and top crude importer, cut <a href="https://www.thenationalnews.com/business/energy/2023/06/20/oil-prices-drop-over-concern-chinas-stimulus-measures-may-fall-short/" target="_blank">two market-based benchmark lending rates </a>this week, but the loosening of the monetary policy was less aggressive than what some analysts were expecting. China’s economy, which rebounded after the lifting of Covid-19 restrictions at the start of the year, lost momentum in May, posting weaker retail sales and manufacturing output while registering a slowdown in the property sector. Earlier this week, US investment bank Goldman Sachs trimmed its <a href="https://www.thenationalnews.com/business/energy/2023/06/12/goldman-sachs-cuts-oil-price-forecasts-on-strong-crude-supply-and-weak-demand/" target="_blank">2023 gross domestic product growth forecast </a>for the Asian country to 5.4 per cent, from 6 per cent earlier. It also reduced its 2024 growth forecast to 4.5 per cent, from 4.6 per cent. “China's recovery is also not taking off as many thought earlier in the year and stimulus efforts have thus far not been as powerful as they could have been,” said Craig Erlam, senior market analyst at Oanda. “I expect both of these will change in the second half of the year but for now, it's not helping oil prices.” MUFG cut its short-term oil price forecasts on Wednesday, citing higher-than-expected supply from Russia and other sanctioned countries. The Japanese bank now expects<a href="https://www.thenationalnews.com/business/energy/2023/06/15/oil-steadies-amid-prospects-of-further-interest-rate-increases-and-us-reserve-build-up/" target="_blank"> Brent to average about $81 a barrel</a> this year, lower than its previous estimate of $88. It also slashed its 2024 forecast to $84 from about $98. MUFG said its bullish 2023 price outlook was based on a supply-constrained market with depleted crude inventories, limited spare capacity, underinvestment due to ESG (environmental, social, and governance) concerns and poor returns in the old economy. Market fundamentals have been “softer-than-expected” in the first half of the year and prospects for the second half are “starting to slip”, the bank said. “Global oil demand data does not explain the oil price sell-off, as demand estimates have been consistently revised higher since November 2022,” MUFG said. “Demand is strong for services orientated refined products, such as gasoline and jet fuel, but weak for goods-orientated products, such as naphtha and LPG [liquefied petroleum gas]” The bank maintained its global oil demand growth estimates of 1.3 million barrels per day for 2023 and 1.1 million bpd for 2024. But it now expects a smaller supply deficit of 1.2 million bpd for the second half of the year, which is lower than its previous estimate of 1.6 million bpd. “Earlier this year, it was mostly driven by China’s reopening, a recovery in aviation and an acceleration of Russian oil decoupling,” the bank said. “The deficit we envisage in H2 2023 is now mostly a function of demand seasonality and higher Opec+ supply.”