Home NewsCommodities News Oil rises for third day as rate hike concerns ease By Reuters

Oil rises for third day as rate hike concerns ease By Reuters

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Oil rises for third day as rate hike concerns ease By Reuters

© Reuters. FILE PHOTO: Oil tankers sail along Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

By Alex Lawler

LONDON (Reuters) – Oil rose for a third straight day on Wednesday as investor concern eased about US interest rate hikes and an industry report pointed to a drop in inventories.

Comments from US Federal Reserve Chair Jerome Powell on Tuesday were seen as less hawkish than feared, boosting risk appetite and weighing on the dollar. A weaker dollar makes oil cheaper for other currency holders.

“It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap,” said Craig Erlam, senior market analyst at brokerage OANDA.

rose 41 cents, or 0.5%, to $84.10 a barrel at 1311 GMT. US West Texas Intermediate (WTI) crude climbed 48 cents, or 0.6%, to $77.62.

With less aggressive US rate hikes, the market is hoping the world’s biggest economy can dodge a sharp economic slowdown or even a recession that would hit oil demand, while China’s reopening after ending COVID curbs also bolsters fuel use.

“A looming oil demand surge together with lackluster global supply growth will ensure that the oil balance tightens 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 output curbs in place, and an Iranian official said on Wednesday the group would likely continue its current policy at its next meeting.

Also, the earthquake that struck Turkey and Syria on Monday stopped crude flows from Iraq and Azerbaijan out of the Turkish port of Ceyhan. BP (NYSE:) Azerbaijan has declared force majeure on Azeri crude shipments from the port. Iraq’s pipeline to Ceyhan resumed flows on Tuesday.

Adding further support was weekly inventory data from the American Petroleum Institute industry group, which showed crude stocks fell by about 2.2 million barrels in the week ended Feb. 3, according to market sources.

The market will be looking to see if figures from the US Energy Information Administration at 1530 GMT confirm the decline.

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