Oil Rises As Traders Reconsider Demand and Rate Cuts

Meanwhile, the Saudis increase crude prices to Asia: File Image/PixaBay

Easily-swayed crude traders on Wednesday caused a rise in oil prices after expressing optimism regarding U.S. supply inventories and interest rates, despite their pessimism about these same factors leading to declines in earlier sessions.

In the previous session, concern was generated by a Reuters analytical survey estimating that U.S. crude inventories rose by about 2.6 million barrels in the week to March 1; in fact, the rise was 1.4 million barrels according to the Energy Information Administration, plus gasoline stockpiles fell by 4.5 million barrels.

Also, while anticipation of the U.S. Federal Reserve holding interest rates steady was a pressure point to crude prices, Fed chair Jerome Powell told the House Financial Services Committee on Wednesday he still expects the central bank will begin loosening policy this year.

Powell's comment was apparently taken to heart by traders, even though he issued the familiar warning that "The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

Brent settled up 92 cents, or 1.1 percent, at $82.96 per barrel, while West Texas Intermediate settled up 98 cents, or 1.3 percent, at $79.13.

Given the propensity of trading to turn on a dime of late, Rahul Kalantri, VP commodities, Mehta Equities Ltd., said, "Crude oil prices are anticipated to remain volatile; the support for crude oil is identified at $76.80–$76.10, with resistance positioned at $78.30–$79.00."

In other oil news on Wednesday, Saudi Arabia announced it would raise prices of crude by 20 cents per barrel to Asia, just days after the Organization of the Petroleum Exporting Countries (OPEC) extended its 2.2-million barrel per day output cuts through Q2.