Oil prices increased on Wednesday, supported by a falling dollar that followed indications of sluggish US inflation, allaying concerns that the world’s top oil consumer may experience a recession as a result of more interest rate increases.
At 0128 GMT, Brent crude futures were up 20 cents, or 0.2%, to $85.66 per barrel, while West Texas Intermediate (WTI) crude futures were up 34 cents, or 0.4%, to $79.21 per barrel, adding to gains of about 1% from the previous session.
“A favorable season for company reporting caused a change in sentiment. Expectations that the Fed will be able to suspend rate hikes increased as well in response to signs of lowering inflation “In a note, an ANZ commodities analyst stated.
Lower dollar index was a result of tempered rate hike expectations, which served to bolster oil prices by making the commodity more affordable for customers using foreign currencies.
The Organization of the Petroleum Exporting Countries and its allies, which includes Russia, are gathering on Wednesday, and producers are expected to support the current output targets set in November.
The 10 OPEC countries produced 920,000 fewer barrels per day (bpd) than the group’s targeted levels under the OPEC+ deal in January as Iraqi exports decreased and Nigeria’s output remained flat, according to a Reuters survey.
The gap was more than the December deficit of 780,000 bpd.
The American Petroleum Institute business group’s data revealed that oil stocks increased by around 6.3 million barrels in the week ended January 27, which is unfavorable news, according to market sources.
That was a larger build than the 400,000 barrels that Reuters’ polled analysts on average had predicted.
Contrary to analysts’ predictions, distillate stocks, which include diesel and heating oil, increased by around 1.5 million barrels.