Oil prices rising for third day in a row for number of reasons
2023.02.08 09:03
Oil prices rising for third day in a row for number of reasons
By Kristina Sobol
Budrigannews.com – Oil gained for a third day in a row on Wednesday as an industry report indicated a decrease in inventories and investor concerns about U.S. interest rate hikes eased.
Tuesday’s remarks from Jerome Powell, chair of the U.S. Federal Reserve, were viewed as less hawkish than initially anticipated, which increased risk appetite and weighed on the dollar. Oil is cheaper for holders of other currencies when the dollar is weaker.
Craig Erlam, senior market analyst at OANDA, stated, “It would appear traders had become a little more defensive on the expectation of a hawkish shift, but Powell refrained from taking the leap.”
by 0912 GMT, it had increased by 99 cents, or 1.2%, to $84.68 a barrel. West Texas Intermediate (WTI) crude rose 93 cents, or 1.2%, to $78.07 in the United States.
The market is hoping that the world’s largest economy can avoid a sharp economic slowdown or even a recession that would hit oil demand with less aggressive U.S. rate hikes. China’s reopening after COVID curbs were lifted also boosts fuel use.
According to oil broker PVM’s Stephen Brennock, “a looming oil demand surge together with lackluster global supply growth will ensure that the oil balance tightens over the coming months.”
On supply, OPEC and its allies, referred to as OPEC+, decided last week to maintain output restrictions. On Wednesday, an Iranian official stated that the group would probably maintain its current policy at its subsequent meeting.
Additionally, the earthquake that occurred on Monday in Turkey and Syria halted the flow of crude from Iraq and Azerbaijan out of Ceyhan. On the other hand, on Tuesday, Iraq’s pipeline to the Ceyhan export hub reopened.
According to market sources, weekly inventory data from the American Petroleum Institute’s industry group showed that crude stocks decreased by approximately 2.2 million barrels in the week ending February 3.
At 1530 GMT, the market will be watching to see if the decline is confirmed by data from the U.S. Energy Information Administration.
