Oil steadied in Asia as investors weighed the outlook for monetary policy and a mixed industry report on US crude stockpiles.

West Texas Intermediate futures traded near $68 a barrel after closing 2.4% lower in the previous session. The European Central Bank said on Tuesday that it probably won’t be able to end its cycle of interest-rate hikes anytime soon, which will likely present headwinds for the demand outlook.

The American Petroleum Institute reported US crude stockpiles fell last week, but inventories at the key storage hub at Cushing rose, according to people familiar with the figures. Government data is due later Wednesday.

The US oil benchmark is down 14% this year and on track for its first back-to-back quarterly decline since 2019, due to a sluggish economic recovery from China and aggressive interest-rate hikes from the US Federal Reserve. Resilient Russian exports have added to the price pressures.

Still, a flurry of fresh data showed unexpected strength in several areas of the US economy — including housing, manufacturing and consumer data — painting a picture of resilience and reducing the likelihood a US recession is imminent.

“A raft of stronger than expected US macro data, as seen yesterday, does increase the likelihood of further rate hikes from the Fed,” said Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. “Clearly good news is still bad news when it comes to the oil market.”

Widely-watched timespreads are weakening, with the three-month spread for global benchmark Brent falling into contango on Tuesday. The bearish pattern, which indicates ample supply, widened further to the deepest since December on Wednesday.

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