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Oil futures rose slightly Wednesday as investors awaited a closely watched round of U.S. inflation data and the latest official update on crude inventories after industry figures were said to show an increase in stocks.
The U.S. benchmark, West Texas intermediate crude, ended Tuesday at its highest since Jan. 23.
Price action
-
West Texas Intermediate crude for May delivery
CL.1,
-0.07% CLK23,
-0.07%
rose 14 cents, or 0.2%, to $81.67 a barrel on the New York Mercantile Exchange. -
June Brent crude
BRN00,
+0.04% BRNM23,
+0.04% ,
the global benchmark, gained 23 cents, or 0.3%, to $85.84 a barrel on ICE Futures Europe. Brent ended Tuesday at its highest since March 6. -
Back on Nymex, May gasoline
RBK23,
-1.40%
fell 1.3% to $2.828 a gallon, while May heating oil
HOK23,
-0.12%
rose 0.2% to $2.674 a gallon. -
May natural gas
NGK23,
+0.69%
added 0.8% to $2.203 per million British thermal units.
Market drivers
Crude prices have found support on renewed optimism over the outlook for Chinese demand and on reduced supply in the wake of the production cuts by OPEC+ announced on April 2. Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries announce cuts beginning in May that would take a collective 1.15 million barrels a day off the market through year-end. Russia said it would extend a cut of 500,000 barrels a day through year-end.
But investors continue to worry about the potential for a sharp economic downturn as a result of interest rate rises by the Federal Reserve and other major central banks, as well as in the aftermath of problems at regional U.S. banks.
The March U.S. CPI reading from the Bureau of Labor Statistics, which tracks changes in the prices paid by consumers for goods and services, is expected to show a 5.2% rise from a year earlier, slowing from a 6% year-over-year rise in the previous month, according to a survey of economists by Dow Jones.
See: Why March’s inflation report could upset the stock market, seal the deal on the next rate hike
“Clearly, any surprises to the upside could prove negative for risk assets with the market likely having to readjust its expectations on how much more tightening we will see from the Federal Reserve,” said Warren Patterson and Ewa Manthey, commodities strategists at ING, in a note.
Supply data will also be in focus. The American Petroleum Institute late Tuesday reported that crude inventories rose by nearly 380,000 barrels last week, according to a source citing the data, while gasoline inventories were up 450,000 barrels and diesel stocks dropped nearly 2 million barrels.
Official data from the U.S. Energy Information Administration was set for release Wednesday morning. Analysts surveyed by S&P Global Commodity Insights, on average, look for crude stocks to show a rise of 700,000 barrels, while gasoline stocks are seen down 900,000 barrels and distillate supplies up 2 million barrels.
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