Oil prices gained on Wednesday, rebounding from losses earlier in the session amid concerns over fuel demand and the broader economy ahead of an expected rate hike in interest rates by Fed.
In volatile trading, Brent crude futures for August were up 15 cents, or 0.1%, at $121.32 a barrel at 0422 GMT, after falling as low as $120.65 at the start of the session after falling 0.9% on Tuesday.
West Texas Intermediate crude for July rose 15 cents, or 0.1%, to $119.08 a barrel, after hitting a low of $118.22 earlier in the day, which dropped 1.7% a day earlier.
Rising inflation has got investors and oil traders gearing up for a big move by the Fed this week – an increase of 75 basis points, making it the largest U.S. rate hike in 28 years.
Investors bet that the US Fed will announce a 75-basis point rate hike. An aggressive hawkish signal from the Fed could raise concerns about a global recession that could dampen the demands of the energy market.
If the Fed announces a 75-basis point gain tonight, it could divert investors to the safe-haven dollar and hit risk-sensitive assets like oil.
On the demand side, China’s latest COVID outbreak in Beijing has raised fears of a new phase of lockdown. However, with the unexpected increase in the country’s economy and industrial production, it showed signs of recovery in May after the decline in the previous month.
In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) adhered to its forecast that world oil demand will rise above pre-pandemic levels in 2022.
Meanwhile, a decline in exports from Libya amid a political crisis that has hit production, exports, and ports is exacerbating the crisis in global supply and adding support to prices.
