Oil prices steadied Wednesday as the market waited for U.S. inflation data later in the day that will likely influence the Federal Reserve’s policy on interest rate hikes.
Brent crude gained 14 cents, or 0.2 percent, to $85.75 a barrel by 0917 GMT, while U.S. West Texas Intermediate rose 10 cents, or 0.1 percent, to $81.63 a barrel.
Prices had risen about 2 percent on Tuesday amid optimism that the U.S. Federal Reserve is getting closer to ending its cycle of interest rate hikes, making dollar-priced oil cheaper for buyers holding other currencies.
The U.S. consumer price index is expected to show March core inflation rose 0.4 percent on a monthly basis and 5.6 percent year-on-year, according to a Reuters poll of economists.
Philadelphia Federal Reserve Bank President Patrick Harker said on Tuesday that he felt the U.S. central bank may soon be done raising interest rates, while Minneapolis Federal Reserve Bank President Neel Kashkari said he believed inflation, now at a rate of 5 percent by the Fed’s preferred measure, will get to “the mid-threes” by the end of this year.
“With traders being wary of the potential for inflation data to come in on the hotter side of expectations, it would not surprise to see the current positive market sentiment take a more circumspect turn ahead of key macro data this week,” Kohle Capital Markets analyst Tim Waterer said.
The U.S. government will release its crude stockpile data at 10:30 a.m. (1430 GMT) on Wednesday.
In another negative for oil demand, the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, citing the impact of higher interest rates.
The market also awaits clarity on oil demand and supply, with monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency due on Thursday and Friday, respectively.
The U.S. Energy Information Administration on Tuesday cut its forecast for oil production by OPEC countries by 0.5 million barrels-per-day for the rest of 2023 and cut its 2023 world oil demand growth forecast by 40,000 bpd.
