Oil prices rose gradually on Wednesday as investors await the outcome of the US Federal Reserve’s June meeting, key economic data from China, and government data on US crude stockpiles.
Brent crude futures rose 32 cents, or 0.4%, to $74.61 a barrel at 0610 GMT. West Texas Intermediate (WTI) crude was up 22 cents, or 0.3%, to trade at $69.64.
Both indicators rose more than 0.3% on Tuesday on hopes of rising fuel demand after China’s central bank cut its short-term lending rate. Brent climbs 0.4%, and WTI is up 0.3%.
Speculators, who make short-term hot money movements, seem to be hesitant to raise prices due to important data such as China’s industrial production, retail sales, and May’s housing price index to be announced tomorrow, and today’s FOMCs.
Market participants expect the US central bank Federal Open Market Committee (FOMC) to pause rate hikes amid uncertainty over both the economic outlook and the lagged effects of 10 rate hikes since March 2022.
Rate hikes strengthen the dollar, make US-denominated commodities more expensive for holders of other currencies, and put pressure on oil prices. A pause in price hikes could spur economic growth and oil demand by supporting prices.
Economists expect the Bank of Canada to raise interest rates again in July after a surprise increase of 25 basis points last week.
The European Central Bank is expected to raise interest rates another quarter point on Thursday to rein in persistent inflation. However, the Bank of Japan, which will announce its plan on Friday, is expected to maintain its extremely loose policy.
On the supply side, U.S. crude inventories increased by nearly 1 million barrels in the week ending June 9, contrary to analysts polled by Reuters forecasting an average decline of 500,000 barrels, according to market sources citing figures from the American Petroleum Institute (API).
Government data on inventories will be released later in the day.
Meanwhile, OPEC+ has given Russia a slightly higher oil production possibility, meaning that Russia can produce more under the latest quotas than previously agreed.
