OIL prices rose marginally on Wednesday as the prospect of delays to US interest rate cuts and a higher-than expected rise in US crude stocks offset support from a potential extension to Opec+ supply cuts.
Brent crude futures edged up 14 cents to US$83.79 a barrel by 10.50 am EST (1550 GMT). US West Texas Intermediate futures (WTI) gained 6 cents to reach US$78.93. Both benchmarks had fallen US$1 in earlier trading.
The early dips in prices were due to profit-taking plus a combined response to a reported surge in US crude stocks by the American Petroleum Institute this week and continuing hopes for a Gaza ceasefire deal in coming days, said Vandana Hari, founder of oil market analysis provider Vanda Insights.
US crude inventories rose by 4.2 million barrels last week, surpassing expectations of a 2.74 million-barrel build, the US Energy Information Administration (EIA) said on Wednesday.
Federal Reserve Governor Michelle Bowman had signaled on Tuesday that she was in no rush to cut US interest rates, particularly given continuing inflation risks. Higher-for-longer rates could dampen economic growth and suppress demand for oil.
Due on Thursday is the January US personal consumption expenditures (PCE) price index, the Fed’s preferred measure of inflation and a key factor in rate decisions.
“The power of inflationary expectations must not be underestimated,” Tamas Varga of oil broker PVM said in a note on Wednesday. “In case tomorrow’s US PCE reading comes in above expectations, a temporary top might have been found” for oil.
Brent and WTI futures rose more than US$1 a barrel on Tuesday after Reuters reported that the Organization of the Petroleum Exporting Countries and allies led by Russia (Opec+) will consider extending voluntary oil output cuts into the second quarter.
Analysts at ANZ Research said that such a move by Opec+ would be likely to tighten the market.
Russian authorities on Tuesday announced a six-month ban on gasoline exports starting March 1 to compensate for rising demand from consumers and farmers and to allow for planned refinery maintenance. REUTERS
