LONDON: Oil prices went up on Wednesday after an industry report of a larger-than-expected decrease in US crude inventories suggested great demand and helped offset concerns over further interest rate hikes.
Crude stocks dropped by about 2.4 million barrels. Brent crude rallied 48 cents, or 0.7 per cent, to 72.74 dollars a barrel at 0928 GMT, while West Texas Intermediate US crude gained 31 cents, or 0.5 per cent, to 68.01 dollars, Reuters reported.
Brent is down about 15 per cent this year as increasing interest rates hit investor appetite, while the economic recovery of China has faltered after several months of lower-than-expected consumption and other data.
Saxo Bank’s head of commodity strategy Ole Hansen said that the market remained struck with demand worries. OPEC production has assisted in preventing a deeper setback.
He said that the commodity sector, including crude oil, is affected by risk adversity amid growth worries in China and US data strength pointing to higher rates.
European Central Bank (ECB) President Christine Lagarde said on Tuesday that the high inflation would require the bank to avoid declaring an end to rate spikes.
Surge in US Consumer Confidence
A surge in US consumer confidence in June also led to market worries that the Federal Reserve would expectedly have to continue increasing interest rates.
Still, some observers expect the market to tighten in the second half of 2023, partially due to ongoing OPEC+ supply slashes and Saudi Arabia’s voluntary reduction for July.
