Comments from US Federal Reserve Chairman Jerome Powell on Tuesday were seen as less hawkish than expected, boosting risk appetite and weighing on the dollar. A weaker US currency makes dollar-denominated oil cheaper for buyers holding other currencies.
“It looks like traders have become a bit more defensive in the face of the expectation of a hawkish turn, but Powell has refrained from taking the plunge,” said Craig Erlam, senior market analyst at brokerage OANDA.
Brent crude rose 80 cents, or 1%, to $84.49 a barrel as of 1433 GMT. U.S. West Texas Intermediate (WTI) crude rose 93 cents, or 1.2%, to $78.07.
With less aggressive rate hikes in the United States, the market is hoping the world’s largest economy can avoid a sharp economic slowdown or even a recession that would hurt oil demand. China’s end of COVID-19 restrictions should also support fuel demand.
“An impending surge in oil demand coupled with lackluster global supply growth will ensure a tightening of the oil balance over the coming months,” said Stephen Brennock of oil broker PVM.
On supply, OPEC and its allies, known as OPEC+, decided last week to keep production restrictions in place and an Iranian official said Wednesday the group would stick to it. likely to current policy at its next meeting. The earthquake that struck Turkey and Syria on Monday halted the flow of crude oil from Iraq and Azerbaijan out of the Turkish port of Ceyhan. BP Azerbaijan has declared force majeure on shipments of Azeri crude from the port. The Iraqi pipeline to Ceyhan resumed flow on Tuesday.
Weekly inventory data from the American Petroleum Institute, which showed crude inventories fell about 2.2 million barrels in the week ended Feb. 3, added further support, it said. market sources.
The market will be looking to see if the decline is confirmed by US Energy Information Administration figures at 15:30 GMT.
(Reporting by Alex Lawler; Additional reporting by Sonali Paul in Melbourne and Jeslyn Lerh in Singapore; Editing by Jason Neely and David Goodman)
