Oil prices increased on Wednesday ahead of a possible rate cut decision from the US Federal Reserve (Fed) and data indicating a rise in oil demand in the US, the world’s largest crude consumer.
The international oil benchmark of Brent crude rose by 0.36% to 73.28 per barrel at 11.15 a.m. local time (0815 GMT), up from the previous session’s close of $73.01.
The US benchmark West Texas Intermediate also increased by 0.37% to $69.99 per barrel, compared to $69.73 at the close of the prior session.
Market players are closely following the Fed’s monetary policy decision on Wednesday, while a 25 basis points rate cut is widely expected during the bank’s December meeting.
Increased economic activity spurred by lower interest rates is anticipated to boost oil demand.
Experts are also awaiting a statement from Fed Chairman Jerome Powell for insight into the central bank’s next monetary policy move.
Inflation data is set to be released in the Eurozone and the UK, later in the day.
Anticipation of further interest rate cuts by the European Central Bank next year is also bolstering market sentiment.
On Thursday, both the Bank of England and the Bank of Japan will announce their respective monetary policy decisions.
The American Petroleum Institute (API) reported a larger-than-expected drawdown in US commercial crude oil inventories for the week ending Dec. 13.
API data indicated a 4.7 million barrel decline, significantly exceeding market expectations of a 1.85 million barrel fall.
The larger-than-expected drop in stocks suggests strengthening demand in the US, the world’s largest oil consumer.
The US Energy Information Administration will release official inventory data later on Wednesday.
Meanwhile, international credit rating agency Fitch Ratings warned that declining demand due to the tariffs that US President-elect Donald Trump plans to impose after January and potential countermeasures from affected countries, poses the biggest risk to global commodity markets.
