By Adedapo Adesanya
Oil rose on Tuesday on hopes that the US Federal Reserve might ease up on its policy tightening, with Brent crude futures up by $1.43 or 1.7 per cent to $85.61 a barrel, as the US West Texas Intermediate (WTI) futures increased by $1.79 or 2.2 per cent to $81.53 a barrel.
Investors were more optimistic that the US Federal Reserve was getting closer to ending its cycle of interest rate hikes, making Dollar-priced oil cheaper for buyers holding other currencies.
The US inflation report for the month of March will be released on Wednesday, and it is expected to help investors gauge the near-term trajectory for interest rates.
There is optimism that the US central bank will raise its benchmark interest rate only once more by 25 basis points, but the central bank’s policy path will depend on incoming data.
Meanwhile, concerns remain over Chinese demand as data from China showed consumer inflation in March rose at its slowest pace since September 2021.
The Chinese consumer price index (CPI) rose 0.7 per cent year-on-year, the slowest pace since September 2021 and weaker than the 1.0 per cent gain in February, the country’s National Bureau of Statistics (NBS) said on Tuesday.
This insight suggests that demand weakness persists in an uneven economic recovery.
Support continued to come to the market since the Organisation of the Petroleum Exporting Countries and allies, including Russia, known as OPEC+, surprised the market last week with further cuts to production targets from May.
OPEC output will fall by 500,000 barrels per day in 2023, then rise by 1 million barrels per day in 2024 after the group’s output agreement expires, the Energy Information Administration (EIA) forecast on Tuesday.
Total non-OPEC liquid fuels production is expected to grow by 1.9 million barrels per day in 2023 and by 1 million barrels per day in 2024, the EIA said.
Crude oil inventories in the US rose this week, adding 377,000 barrels, the American Petroleum Institute (API) data showed on Tuesday.
The total number of barrels of crude oil gained so far this year is still more than 49 million barrels.
The market will be waiting for a confirmation of the level from the official EIA figures on Wednesday.
