Oil rebounded early Wednesday. Prices rebounded after two consecutive weeks of losses in the afternoon as expectations for the Fed’s hawkish speech and possible US crude stockpiles outweighed China’s demand concerns.
Brent futures rose 35 cents to $76.25 a barrel and West Texas Intermediate (WTI) crude futures climbed 34 cents, at 0307 GMT to $71.53.
Fed Chairman Powell is expected to present a hawkish six-month statement to Congress for higher interest rates in the coming months and more resilient inflation in the near term. Later Wednesday, congressional testimony is expected to provide clues about future interest rate movements in the world’s largest economy.
Fed officials say they are focusing on reducing inflation that is too high so that the US economy can return to sustainable growth, which could increase demand for oil.
A possible drop in US crude inventories also supported prices, with analysts estimating that crude inventories dropped by an average of 400,000 barrels in the week through June 16.
US oil inventory data from the American Petroleum Institute industry group (API) will be released on Wednesday, and official Energy Information Administration (EIA) data on Thursday.
In China, the world’s largest oil importer, the struggle for the recovery of the economy continued, while concerns about the recovery of demand limited price increases.
While data from China is still uncertain, the stimulus has arrived and will likely be instrumental in stimulating the economy. By the way, strong growth in demand is expected in the second half.
Seeking to boost growth, On Tuesday, China lowered its two benchmark lending rates, the one-year and five-year loan rate (LPR), by 10 basis points. For the first time in 10 months, the cuts were less than some estimates. 50% of analysts were expecting a 15 basis point cut in the 5-year LPR.
The rate cut comes after the latest economic data showed that China’s retail and factory sectors struggled to sustain the momentum earlier this year.
