OIL FUTURES: Crude falls on lower China growth forecast, US rate hike concerns

Crude oil futures were lower in mid-morning Asian trade March 6 as investors digested China's lower-than-expected growth target, while growing consensus in the US of a larger interest rate hike at the upcoming FOMC meeting pressured prices further.

At 10:30 am Singapore time (0230 GMT), the ICE May Brent futures contract was down 52 cents/b (0.61%) from the previous close at $85.31/b, while the NYMEX April light sweet crude contract was 47 cents/b (0.59%) lower at $79.21/b.

China's government has announced a 5% gross domestic product target for 2023 at the National People's Congress meeting, lower than market expectations of a 5.5% target.

"The 5% approximate target was at the low end of expectations, challenging hopes of a stronger-than-expected recovery and pointing to a more wait-and-see approach in tapping on large stimulus to support growth," IG Market Strategist Yeap Jun Rong said in a March 6 note.

In the US, non-farm payroll data due for release March 10 is expected to provide further indications of inflation.

"Non-farm payroll data will be focal given many Fed members are looking for a cooling in jobs post the hot January outturn. If jobs don't cool sufficiently enough, several Fed officials have said they would be open to a 50bp hike at the March FOMC meeting," ANZ Research analysts Tom Kenny and Arindam Chakraborty said in a March 6 note.

Federal Reserve Chair Jerome Powell will be speaking before the Senate Banking Committee and House Financial Services Committee March 7-8, with the market waiting to hear the Federal Reserve's stance on interest rate hikes.

"If Powell does not slam the door shut on the potential for a larger hike, markets could put substantially more weight on a 50bp hike at the March meeting in response to last month's hotter data," SPI Asset Management Managing Partner Stephen Innes said in a March 6 note.

Dubai crude swaps were higher while intermonth spreads were lower in mid-morning trade in Asia March 6 from the previous close.

The May Dubai swap was pegged at $81.87/b at 10 am Singapore time (0200 GMT), up 82 cents/b (1.01%) from the March 3 Asian market close.

The April/May Dubai swap intermonth spread was pegged at 89 cents/b at 10 am, down 5 cents/b over the same period, and the May/June intermonth spread was pegged at 87 cents/b, down 2 cents/b.

The May Brent/Dubai EFS was pegged at $3.51/b, down 5 cents/b.