Oil prices up on strong U.S. demand, Fed signals in focus
Oil prices rose on Wednesday on expectations of strong global demand, including in the world's top consumer the United States, and as even somewhat sticky U.S. inflation did not dent expectations the Fed might start cutting rates soon.
Brent futures for May delivery were up 36 cents, or 0.44%, at $82.28 a barrel by 0020 GMT. The April U.S. West Texas Intermediate (WTI) crude contract rose 38 cents, or 0.49%, to $77.94.
The Organization of the Petroleum Exporting Countries, or OPEC, stuck to its forecast of a strong oil demand growth globally of 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025 and raised its economic growth forecast for this year.
In another indication of healthy demand, U.S. crude oil inventories and fuel inventories fell last week, according to market sources citing American Petroleum Institute figures.
Analysts still believe the Federal Reserve may start cutting rates in summer despite U.S. consumer prices rose solidly in February on higher costs for gasoline and shelter, suggesting some stickiness in inflation. Lower rates support oil demand.
"Stronger-than-expected U.S. core CPI data did not trigger as big a reassessment in rate expectations as they did last month in financial markets, and we still forecast the Fed to start easing policy around June," Capital Economics said in a note.
Oil prices were under pressure in the previous session after the U.S. Energy Information Administration raised domestic oil output forecast but declines were limited on expectations that OPEC+ output cuts will still slow global oil growth and on the recent wave of drone attacks on Russia, including refineries.