Wednesday’s Asian trade saw a rise in oil prices as investors focused on Chinese stimulus measures and a possible build in U.S. stockpiles amid a weakening dollar ahead of critical U.S. inflation data.
As of 10:21 AM Bangkok time, Brent oil prices were up 0.21% to $79.57 per barrel, while West Texas Intermediate crude futures gained 0.21% to $74.99 per barrel. On Tuesday, both contracts climbed more than 2%, finishing at 10-week highs.
The dollar dropped to a two-month low on Tuesday as investors speculated the Federal Reserve was nearing the end of its interest rate hiking cycle, sending crude prices soaring. The U.S. dollar fell further during the Asian trading session, losing 0.4% against a currency basket.
Oil was also supported by tightening supplies as the world’s largest crude exporters; Saudi Arabia and Russia cut output.
The Federal Reserve will look at Wednesday’s inflation data and Thursday’s report on producer prices to decide whether to raise interest rates again.
The markets are pricing in a 92% chance of a 25 basis point boost by the end of the month, according to the CME FedWatch tool, but they are still cautious about future raises beyond that.
Fed policymakers have indicated that they intend to raise interest rates by at least another 50 basis points to counteract continued pricing pressures.
The American Petroleum Institute (API) reported an unexpected increase of over 2 million barrels in U.S. crude stocks in the week ending July 7.
Energy Information Administration data is expected to indicate a draw of 2.2 million barrels later on Wednesday, which is consistent with the API data.
Since the Chinese economy is struggling to recover from the devastating COVID pandemic, traders have been watching for signs of additional stimulus measures in the world’s largest petroleum importer.
