Despite a tight physical oil market, investors have sold oil futures, worried that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand. Prices fell by more than 7% on Tuesday in volatile trade.
Brent crude was up 80 cents, or 0.8%, at $100.29 a barrel at 1120 GMT. U.S. West Texas Intermediate crude gained 74 cents, or 0.8%, to $96.58.
Brent is down sharply since hitting $139 in March, close to the all-time high reached in 2008. Renewed COVID-19 curbs in China have weighed on the market this week.
The decline in crude futures has yet to be reflected in the solid physical oil market. Forties crude, one of the grades underpinning Brent futures, traded a record high premium to the benchmark of plus $5.35 a barrel on Tuesday.
Consumer Prices Rising
On investors’ radar on Wednesday is the U.S. June consumer prices data, which economists expect to show that U.S. inflation has accelerated to 1.1% monthly and 8.8% annually.
And for the oil market, the latest U.S. supply report from the Energy Information Administration will be in focus. Analysts expect a decline in crude and gasoline inventories. [EIA/S]
Still, according to figures from industry group the American Petroleum Institute, cited by sources on Tuesday, crude stocks rose about 4.8 million barrels, weighing on prices.
The market also is watching U.S President Joe Biden’s visit to the Middle East, where he should ask Saudi Arabia and other Gulf producers to raise oil output.