Oil prices hold up in hopes that economic growth will support demand

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The sun sets behind an oil pump outside of Saint-Fiacre, near Paris, France, September 17, 2019. REUTERS / Christian Hartmann / File Photo

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  • US Economy Can Withstand Fed Tightening, Omicron Bounces-Powell
  • API data shows U.S. crude stocks are dropping
  • Market considers EIA inventory data expected later Wednesday

SINGAPORE, Jan. 12 (Reuters) – Oil prices stabilized on Wednesday after rising in the previous session on expectations that fuel demand will continue to strengthen, with the US Federal Reserve likely raising interest rates more slowly than expected.

Brent and US crude oil futures are trading at their highest level since the highly contagious Omicron COVID-19 variant emerged in late November did not impact fuel demand like previous variants .

US West Texas Intermediate (WTI) crude futures rose 16 cents, or 0.2%, to $ 81.38 a barrel at 07:31 GMT, adding to a 3.8% jump in the session former.

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Brent crude futures rose 2 cents to $ 83.74 a barrel, after jumping 3.5% in the previous session.

Federal Reserve Chairman Jerome Powell said on Tuesday that the economy of the United States, the world’s largest consumer of oil, is expected to weather the current outbreak of COVID-19 with only “short-lived” impacts and was ready for the start of a tighter monetary policy. Read more

While Powell reassured that the Fed will reduce the rise in inflation, which bolstered the outlook for a rate hike in March, he also said the Fed is able to leave strong economic growth untouched. That could increase. growth sensitive crude oil demand, ”Leona said. Liu, analyst at DailyFX, based in Singapore.

Data from the American Petroleum Institute (API) industry group, however, painted a weaker picture of fuel demand, with lower than expected crude inventories and larger than expected increases in fuel inventory. ‘gasoline and distillate.

Crude inventories fell 1.1 million barrels for the week ended Jan. 7, according to market sources citing API figures. That was less than the 1.9 million barrel draft 10 analysts polled by Reuters had expected.

However, the market was supported by the improved outlook for oil demand from the US Energy Information Administration released on Tuesday, with total US demand increasing by 840,000 barrels per day (bpd) in 2022 compared to last year, against a previous forecast of a 700,000 bpd increase. Read more

“The way (Omicron) cases are increasing, it doesn’t look like the situation can improve anytime soon. However, that doesn’t have much impact on financial and oil markets, as countries aren’t susceptible to resort to severe blockages, “said Madhavi Mehta, a commodity research specialist. analyst at Kotak Securities

“We are better prepared with the health infrastructure as well as the vaccines, so this is seen as a minor problem but not a major challenge.”

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Report by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Richard Pullin, Jacqueline Wong and Christian Schmollinger

Our Standards: Thomson Reuters Trust Principles.

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