By David Gaffen
NEW YORK (Reuters) -Oil prices rose on Wednesday, gaining ground after the Federal Reserve raised interest rates for the fourth time this year, though crude benchmarks ultimately settled within the day’s trading range.
The market was earlier supported by another decline in U.S. oil inventories as refineries picked up activity ahead of the winter heating season.
Brent crude settled up $1.51, or 1.6%, to $96.16 while U.S. West Texas Intermediate (WTI) crude settled up $1.63, or 1.8%, to $90 on the nose.
The U.S. Federal Reserve boosted interest rates by 75 basis points, continuing its efforts to bring down inflation, though the central bank signaled that future increases may be in smaller increments after several rate rises.
The central bank has raised rates to combat U.S. consumer inflation that has reached a four-decade high. So far its moves have not affected the strong labor market, though the Fed’s actions do operate with a lagged effect.
U.S. crude oil stocks fell about 3.1 million barrels on the week, according to federal data. Inventories of gasoline fell, while distillate stocks rose only marginally ahead of the key heating season, when demand is expected to pick up. [EIA/S]
U.S. inventories remain low across most products, worrying analysts who believe that the impending end of releases from U.S. strategic reserves will remove a source of supply that will further tighten markets.
“Every week that goes by, the U.S. is drawing hydrocarbon inventories, and that leads to the question of where does the industry turn when there are no more supplies from strategic petroleum reserve releases,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “That is why we are seeing oil prices being supported.”
Output from the Organization of the Petroleum Exporting Countries (OPEC) fell in October for the first time since June, in addition to pumping 1.36 million barrels per day below its targets.
The potential disruption from the European Union embargo on Russian oil that is set to start on Dec. 5 is also underpinning markets. The ban, a reaction to Russia’s invasion of Ukraine, will be followed by a halt on oil product imports in February. It is expected to limit Russia’s ability to ship crude and products worldwide, and therefore could tighten the market.
China’s zero-COVID policy has been a main factor in keeping a lid on oil prices as repeated lockdowns have slowed growth and pared oil demand.
An unverified note on social media said the Chinese government was going to consider ways to relax COVID-19 rules from next March, potentially boosting demand in the world’s No.2 oil user.
(Reporting by David Gaffen; additional reporting by Shadia Nasralla and Scott DiSavino; editing by Elaine Hardcastle and Grant McCool)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.
Source: The Print
