Oil rose for a third straight day on Wednesday as investor concern eased about U.S. interest rate hikes and an industry report pointed to a drop in U.S. crude inventories.
Comments from U.S. Federal Reserve Chair Jerome Powell on Tuesday were seen as less hawkish than feared, boosting risk appetite and weighing on the dollar. A weaker dollar makes oil cheaper for other currency holders.
“It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap,” said Craig Erlam, senior market analyst at brokerage OANDA.
Brent crude rose 99 cents, or 1.2%, to US$84.68 a barrel by 0912 GMT. U.S. West Texas Intermediate (WTI) crude climbed 93 cents, or 1.2%, to US$78.07.
With less aggressive U.S. rate hikes, the market is hoping the world’s biggest economy can dodge a sharp economic slowdown or even a recession that would hit oil demand, while China’s reopening after ending COVID curbs also bolsters fuel use.
“A looming oil demand surge together with lacklustre global supply growth will ensure that the oil balance tightens over the coming months,” said Stephen Brennock of oil broker PVM.
On supply, OPEC and its allies, known as OPEC+, decided last week to keep output curbs in place, and an Iranian official said on Wednesday the group would likely continue its current policy at its next meeting.
Also, the earthquake that struck Turkey and Syria on Monday stopped crude flows from Iraq and Azerbaijan out of Ceyhan, although Iraq’s pipeline to the Ceyhan export hub resumed flows on Tuesday.
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