By:
The dollar fell to a six-week low ahead of the Federal Reserve’s interest rate decision, which might impact the outlook for fuel consumption. Oil prices increased by roughly 1% to a one-week high on Wednesday, despite an unexpected weekly growth in U.S. crude stocks.
By 11:14 a.m. EDT, Brent futures were up 74 cents, or 1.0%, to $76.06 per barrel (1514 GMT). WTI crude for the United States increased by 64 cents, or 0.9%, to $70.31. Every benchmark was expected to close at its highest level since March 14.
By making petroleum more affordable for customers using other currencies, the U.S. dollar dropped to its lowest level since February 3 versus a basket of other currencies, boosting oil demand.
The U.S. Energy Information Administration (EIA) reported that during the week ending March 17, oil stocks increased by 1.1 million barrels. [EIA/S] [API/S] In a Reuters poll, analysts had predicted a withdrawal of 1.6 million barrels. But, compared to the 3.3 million barrel increase recorded on Tuesday in industry data, the government figures indicated a lesser build.
“The main development here is the build-up of crude, which is sufficient to bring crude oil storage to its highest level in 22 months. We have a large amount of crude oil in storage, and it won’t disappear anytime soon, “said Bob Yawger, a banker at Mizuho.
U.S. crude stockpiles have grown during 12 of the past 13 weeks, boosting inventories to their highest since May 2021.
At 2:00 p.m. EDT, the Fed’s policymakers are expected to announce their decision on interest rates. Due to recent bank failures and bailouts that have roiled markets, the Fed has been hiking interest rates to combat inflation and promote financial stability.
Some investors predict that the Fed will increase rates by just 25 basis points, while others predict it will stop raising rates altogether.
Craig Erlam, senior market analyst at OANDA, said it would be a great shock if the Fed resumed raising interest rates.
Last week, WTI and Brent prices dropped to their lowest levels since 2021 due to worries that the instability in the banking sector could lead to a worldwide recession and reduce oil demand. A last-minute Credit Suisse Group AG rescue boosted oil prices over the weekend.
Despite the decline in crude prices, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, such as Russia, are expected to uphold their agreement to cut output by 2 million barrels per day (bpd) through the end of the year, according to three delegates from the producer group who spoke to Reuters.
Reading More:
