BENGALURU: Oil prices gained a dollar a barrel on Wednesday after some analysts predicted a drawdown in US stockpiles and Federal Reserve Chair Jerome Powell reaffirmed the central bank’s fight to bring inflation down to its 2% target.
Brent futures rose $1.29, or 1.7%, to $77.19 a barrel by 12:07 p.m. EDT (1607 GMT) and US West Texas Intermediate (WTI) crude was up $1.46, or 2.1%, at $72.65 a barrel.
The Fed’s fight to lower inflation “has a long way to go” Powell said on Wednesday in testimony prepared for delivery to the House Financial Services Committee.
Analysts said they did not expect Powell’s testimony to divert significantly from what he said in the press conference after last week’s Fed policy meeting, reiterating the central bank’s decisions will be data-dependent.
Returning the US economy to sustainable growth could bolster oil demand.
Providing some support for prices earlier, analysts polled by Reuters said they expected US crude oil and product inventories to have declined last week. However, an expanded poll now predicts a small build in crude oil stockpiles. Official US oil inventory data from the American Petroleum Institute will be released later on Wednesday and the Energy Information Administration’s report will follow on Thursday. Both reports have been delayed a day by the Juneteenth public holiday on Monday.
Price gains were also capped as British inflation defied expectations of a slowdown, data showed on Wednesday. The rate held at 8.7% in May, boosting expectations the Bank of England will raise interest rates by a hefty half a percentage point on Thursday.
“Countries are struggling to rein in inflation ... and that’s going to dampen growth and threaten recessions across the globe,” said Craig Erlam, senior markets analyst at OANDA.