By Adedapo Adesanya
Brent appreciated by 2.01 per cent or $1.72 to $87.33 per barrel on Wednesday, its highest level since late January, after the inflation rate cooled in the United States.
Also, the West Texas Intermediate improved during the session by 2.1 per cent or $1.73 to trade at $83.26, its highest in five months.
The US Consumer Price Index (CPI) climbed 0.1 per cent last month after advancing 0.4 per cent in February, the country’s Labour Department said.
In the 12 months to March 31, the CPI increased by 5 per cent, the smallest year-on-year gain since May 2021.
The inflation data spurred hopes that the Federal Reserve is getting closer to ending its cycle of interest-rate hikes and cushioned the impact of a small build in U.S. crude oil stocks.
Analysts note that the weaker US CPI print has raised doubts over whether the US Federal Reserve will now hike rates at all next month.
If the US central bank tows that path, a falling interest-rate expectation will reduce recession concerns.
Support came after the US Dollar dropped sharply after the data. A weaker US currency makes dollar-priced oil cheaper for buyers holding other currencies.
Also, prices leaned off data from the Energy Information Administration (EIA), which estimated a modest inventory increase of 600,000 barrels for the week to April 7.
This compared with an inventory draw of 3.7 million barrels for the previous week and put the total at 470.5 million barrels. This was about 3 per cent higher than the five-year seasonal average, the EIA said.
An earlier report from the American Petroleum Institute (API) showed crude inventories rose by about 380,000 barrels in the last week.
Meanwhile, the EIA said in its latest Short-Term Energy Outlook (STEO) that it expected U.S. oil production to rise by about 700,000 barrels per day this year to 12.54 million barrels per day from last year’s 11.88 million barrels per day. This was an upward revision of some 100,000 barrels per day from last month’s STEO.
At the same time, the authority does not expect crude oil prices to go much higher. In fact, the current price level for Brent is what the EIA sees as this year’s average for the benchmark.
Meanwhile, the global oil market could see tightness in the second half of 2023, which would push oil prices higher, said Mr Fatih Birol, executive director of the International Energy Agency (IEA).
In a negative for oil demand, the International Monetary Fund (IMF) on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.
The market is also waiting for clarity on oil demand and supply, with monthly reports from the Organisation of the Petroleum Exporting Countries (OPEC) and the IEA due on Thursday and Friday, respectively.
Dipo Olowookere