Oil prices rose on Wednesday as the market awaits US inflation data, which is likely to affect the Federal Reserve’s policy on future rate hikes later in the day.
Brent crude gained 19 cents, or 0.2%, at 0615 GMT to $85.80 a barrel, while West Texas Intermediate rose 13 cents, or 0.2%, to $81.66 a barrel.
Prices were up nearly 2% on Tuesday on optimism that the Federal Reserve is nearing the end of its cycle of rate hikes, making dollar-priced oil cheaper for buyers holding other currencies.
According to a survey by economists, the US consumer price index is expected to show core inflation rising 0.4% month-on-month and 5.6% year-on-year in March.
Patrick Harker, Chairman of the Federal Reserve Bank of Philadelphia, said on Tuesday that he felt the U.S. central bank might soon stop raising interest rates, while Minneapolis Federal Reserve Bank President Neel Kashkari said he believes inflation, now at a rate of 5% that is in line with Fed’s preferred measure.
By the way, a higher-than-expected inflation pressure could pave the way for another 25 basis points hike in June.
Data from the American Petroleum Institute (API) showed crude inventories increased by about 380,000 barrels in the week ended April 7, despite some analysts’ forecasts for a 600,000-barrel drop.
At the same time, gasoline inventories rose by about 450,000 barrels, according to the API report, while analysts had expected a 1.6 million-barrel drawdown.
The US government will release stock data at 1430 GMT on Wednesday.
The International Monetary Fund (IMF) on Tuesday lowered its 2023 global growth outlook, citing the impact of higher interest rates as another downside for oil demand.
In addition to inflation data, the market expects more clarity on oil demand and supply, with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) to be released on Thursday and Friday, respectively.
On Tuesday, the U.S. Energy Information Administration (EIA) cut its OPEC countries’ oil production forecast for the remainder of 2023 by 0.5 million bpd and its 2023 world oil demand growth forecast by 40,000 bpd.
