Slowing US inflation and China’s determination to jump-start the economy lifted oil prices on Wednesday morning. The market awaited the US central bank’s decision on interest rates and the official weekly report on US oil inventories.
Since morning trading in Europe, the price of benchmark Brent oil rose by more than one percent and exceeded 75 dollars per barrel. American crude oil WTI (West Texas Intermediate) also rose in price by about one percent, and its price rose to more than 70 dollars per barrel, reports OilPrice.
Oil prices were slightly higher in Europe on Wednesday despite the American Petroleum Institute’s (API) estimate on Tuesday that US crude inventories rose by more than a million barrels last week. Gasoline and distillate stocks are also estimated to have increased.
Oil prices continued to rise on Tuesday, primarily due to better US inflation data and evidence that China is already taking steps to boost its economic growth. China’s central bank cut its key short-term interest rate for the first time in 10 months, signaling it wants to boost economic recovery.
China, the world’s largest importer of crude oil, is also considering a broad package of incentives to support the economy, Bloomberg reported citing reliable sources.
According to Tuesday’s data, annual inflation in the US is four percent, its lowest level since April 2021. This contributed to expectations that the Fed will decide at the current meeting to keep the current interest rate, that is, not to raise it in June.
On Monday, oil prices experienced a decline of approximately $3 per barrel, prompted by analysts highlighting increased global supplies and apprehensions surrounding future demand. These concerns arose ahead of the release of new inflation data and an upcoming US Federal Reserve meeting later in the week.
Brent crude futures fell $2.95, or 3.9 percent, to below $72 a barrel, the lowest level since December 2021. At the same time, US WTI crude oil fell by $3.05 or 4.4 percent to $67.12 per barrel.
Goldman Sachs previously cut its oil price forecasts, saying that inventories this year are higher than expected. This year’s maximum crude oil price forecast for Brent is now $86 instead of $95 per barrel, and for WTI, $81 instead of $89.