NEW YORK: Oil prices climbed about 2% on Wednesday on a smaller-than-expected build in US crude inventories, a big withdrawal from distillate and gasoline stockpiles and remarks by the Federal Reserve chief that he still expects US interest rate cuts this year.
Lower interest rates could increase demand for oil by boosting economic growth. Brent futures rose $1.65, or 2.0%, to $83.69 a barrel by 10:44 a.m. EST (1544 GMT). US West Texas Intermediate (WTI) crude rose $2.07, or 2.7%, to $80.22.
Brent was on track for its first daily rise in five days. The US Energy Information Administration (EIA) said energy firms added a smaller-than-expected 1.4 million barrels of crude into stockpiles during the week ended March 1, while distillate and gasoline inventories fell by much more than expected.
For crude stocks, that compares with the 2.1-million barrel build analysts forecast in a Reuters poll and the 0.4-million barrel build shown in data from the American Petroleum Institute (API), an industry group.
In remarks prepared for Congress, Federal Reserve Chair Jerome Powell said the central bank still expects to reduce its benchmark interest rate later this year, though policymakers still needed “greater confidence” in inflation’s continued decline.
Investors see signs of a Fed cut as positive for the economy and oil demand. US private payrolls increased slightly less than expected in February, data showed, bolstering the case for rate cuts. Friday’s US non-farm payrolls data is expected to show an increase of 200,000 jobs in February after surging 353,000 in January, according to a Reuters survey of economists.
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