Home Business Oil rebounds even after U.S. inventory build, big inflation figure

Oil rebounds even after U.S. inventory build, big inflation figure

4 min read
Comments Off on Oil rebounds even after U.S. inventory build, big inflation figure
0
29


Article content

NEW YORK — Oil benchmarks rose on Wednesday, recovering from the previous day’s massive selloff, despite a hike in U.S. oil inventories and after U.S. inflation figures bolstered the case for another big Federal Reserve interest rate increase.

Despite a tight physical oil market, investors have sold oil futures on worries that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand. Prices fell by more than 7% on Tuesday in volatile trade to settle below $100 a barrel for the first time since April.

Article content

However, U.S. oil inventories rose more than expected in a mild respite from the tightness in markets. U.S. commercial crude stocks rose by 3.3 million barrels, government data showed, versus expectations for a modest draw in stocks.

After the data, Brent crude was up 22 cents, or 0.2%, at $99.71 a barrel by 10:46 a.m. EST (1446 GMT). U.S. West Texas Intermediate crude rose 59 cents, or 0.6%, to $96.43.

Investors remain concerned about recent weakness in fuel demand worldwide that is also emerging in the United States.

“Demand issues are catching up to high prices. The U.S. dollar is causing downside pressure on all commodities. There’s been a shift in mentality over the last couple of weeks,” said Tony Headrick, energy markets analyst at CHS Hedging.

Article content

U.S. consumer prices accelerated to 9.1% in June as gasoline and food costs remained elevated, cementing the case for the Federal Reserve to hike interest rates by 75 basis points later this month.

“The inflation reading has blown past all expectations today and there is no doubt now that the Fed will be even more aggressive,” said Naeem Aslam of Avatrade.

Brent is down sharply since hitting $139 in March, which was close to the all-time high in 2008. Renewed COVID-19 curbs in China have weighed on the market this week.

“Although I don’t rule out more downside surprises, I believe the recent selloff could be getting a little overdone,” said Jeffrey Halley of brokerage OANDA.

The decline in crude futures has yet to be reflected in the strong physical oil market. Forties crude, one of the grades underpinning Brent futures, was bid at a record high premium to the benchmark of plus $5.35 a barrel on Tuesday.

U.S. Midland crude was at a premium of $1.50 a barrel to WTI, also reflecting tightness but that grade was below premiums reached in late February after Ukraine was invaded. (Additional reporting by Alex Lawler, Muyu Xu; Editing by Marguerita Choy)



Source link

Load More Related Articles
Load More By 
Load More In Business
Comments are closed.

Check Also

year JGB yield falls, longer-term notes keep rising

Article content TOKYO — The Japanese government bond market moved in mixed directions on W…