After two consecutive sessions of losses, oil prices rebounded on Wednesday. The recovery can be attributed to the anticipation of hawkish Fed talk later in the day and the possibility of U.S. crude stock draws outweighing concerns about China’s demand.
Brent futures rose by 35 cents to reach $76.25 per barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 34 cents to $71.53 at 0307 GMT.
According to ANZ Research, “We expect Fed Chair Powell to deliver a hawkish semi-annual testimony to Congress reflecting the FOMC’s median projection for higher interest rates in the coming months and more resilient inflation in the near term.” The congressional testimony by U.S. Federal Reserve Chair Jerome Powell later in the day is expected to provide clues on future rate moves in the world’s largest economy.
Two Federal Reserve policymakers and a nominated economist expressed their focus on reducing high inflation to restore sustainable growth in the U.S. economy, which could ultimately boost oil demand.
A potential drawdown in U.S. crude stocks also supported prices. A Reuters poll of five analysts estimated that crude stockpiles dropped by an average of 400,000 barrels in the week ending June 16.
Official U.S. oil inventory data from the American Petroleum Institute industry group will be released on Wednesday, and the Energy Information Administration will release their report on Thursday, with both being delayed by a day due to the Juneteenth public holiday on Monday.
Concerns about the recovery of demand in China, the world’s top oil importer, limited the gains in oil prices as its economy faces challenges.
Claudio Galimberti, the research director at Rystad Energy, stated, “The only reason why I think prices are not climbing steadily yet is because the data from China is still unclear. Yet, the stimulus is now in, and my bet is that it will be effective at reviving the economy. With a strong second-half growth in demand, we can expect prices to rise.” Galimberti also added, “As for the Fed meeting, that is also uncertain, but with the latest inflation data coming in at 4%, they have room to be dovish.”
China recently cut its benchmark loan prime rates for the first time in 10 months in an effort to boost growth. However, the rate reduction was smaller than expected, indicating challenges faced by the country’s retail and factory sectors in sustaining earlier momentum.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
