Oil prices were little changed in Asian trade on Wednesday as numerous reports of U.S. monetary policy and economic indicators kept sentiment subdued, despite signs of declining U.S. inventories suggesting tighter supplies.
By 9:56 a.m. Bangkok time, Brent oil futures settled at $84.78 per barrel, while West Texas Intermediate crude futures traded at $80.88 per barrel. Despite the upbeat Chinese statistics, neither contract moved significantly by Tuesday’s close.
According to the American Petroleum Institute, crude oil stocks in the U.S. dropped by 2.68 million barrels in the week ending April 14. This was a larger drop than analysts had anticipated. As fuel demand rises due to better weather, the figure foreshadows a similar trend in government data expected later in the day.
Stronger-than-expected Chinese economic growth figures also buoyed oil markets, adding support to speculation that a rebounding China could propel oil consumption to new highs this year. The country’s travel demand also seemed to be approaching its pre-COVID levels.
However, traders remained on edge as worries about rising interest rates and slower economic growth returned.
On Tuesday, Atlanta Federal Reserve President told CNBC that he expects one more rate hike of 25 basis points before pausing to assess the impact on the economy. This would raise the target range for the Federal Funds rate from 5% to 5.25%.
Bostic’s comments came after St. Louis Fed President James Bullard told Reuters he supports a higher terminal rate of between 5.50% and 5.75%.
According to Fed Fund futures prices, the market is pricing in an 85% chance of a rate hike from the Fed in May and a small chance of a rate hike from the central bank in June.
