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Oil rises amid focus on inflation in US and China

Date:

Wednesday, April 12, 2023 / 00:57

Oil prices rose about 2 percent on Tuesday amid hopes that the U.S. Federal Reserve will ease policy tightening after a key U.S. inflation report on Wednesday.

Brent crude was up $1.43, or 1.7 percent, at $85.61 a barrel, while West Texas Intermediate crude futures were up $1.79, or 2.2 percent, at $81.53 a barrel.
Investors are increasingly optimistic that the Federal Reserve will end its cycle of interest rate hikes, making oil in greenbacks cheaper for buyers holding other currencies.
New York Fed President John Williams said on Tuesday that the possibility of the Fed raising interest rates again by 25 basis points was a good starting point, and that the Fed’s policy path would depend on upcoming data.
A U.S. inflation report due on Wednesday is expected to help investors anticipate the path of interest rates.
“The short-term outlook for crude oil demand will soon become clearer,” said Edward Moya, senior analyst at OANDA.
Data from China showed that consumer price inflation rose in March at the slowest pace since September 2021, indicating continued weak demand in the country.
“China’s consumer price index for March came in lower than expected, which should encourage the Chinese government to further stimulate the economy,” said Tina Ding, analyst at CMC Markets.
Oil futures have risen seven percent since the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, last week announced a new round of production cuts starting in May. Markets.
OPEC production will fall by 500,000 barrels per day in 2023 and rise by a million barrels per day in 2024 after the group’s production deal expires, the US Energy Information Administration said in its Short-Term Energy Outlook report on Tuesday.
The administration expected total non-OPEC production of liquid fuels to increase by 1.9 million barrels per day in 2023 and by one million barrels per day in 2024.
In France, the reopening of the last of four domestic refineries closed due to a month-long strike will boost oil demand.
As for supplies in the United States, crude inventory data is scheduled for release on Tuesday, and five analysts polled by Reuters had forecast crude inventories fell by an average of 1.3 million barrels in the week ended April 7.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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