Oil steady as surprise US crude pulls counters interest rate hike shakes

  • API shows US crude stocks fall – market sources
  • US Fed’s Powell sets the stage for higher and faster rate hikes
  • The rise of the dollar keeps a lid on oil

SINGAPORE, March 8 (Reuters) – Oil prices steadied on Wednesday as industry data showed an unexpected draw in U.S. crude inventories after the market tumbled in the previous session on fears that more aggressive U.S. interest rate hikes would hit demand.

Brent crude futures rose 18 cents, or 0.2%, to $83.47 a barrel. barrel at 0452 GMT, while US West Texas Intermediate (WTI) futures were up 4 cents at $77.62 a barrel. barrel.

Data from the American Petroleum Institute showed U.S. crude stockpiles fell by about 3.8 million barrels in the week ended March 3, according to market sources. The drawdown defied forecasts of a 400,000-barrel rise in crude inventories from nine analysts polled by Reuters.

However, the short-term factors pointed towards a more bearish outlook as investors prepared for steeper US interest rate hikes.

“Fed Chairman Powell’s comments about ‘higher for longer’ interest rates spooked markets and sent risk assets, including commodities, down sharply overnight. The brief rally in oil prices today may be due to profit-taking as nothing fundamental has changed,” says Tina Teng. , analyst at CMC Markets.

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Traders awaited crude inventory data from the US Energy Information Administration later on Wednesday after API data showed a drop in crude inventories for the first time after a 10-week build, she added.

Both Brent and WTI fell more than 3% on Tuesday after comments by US Federal Reserve Chairman Jerome Powell that the central bank would likely have to raise interest rates more than expected in response to the latest strong data.

“This raised concerns about weaker US demand,” ANZ Research analysts said in a note to clients.

Powell’s comments sent the U.S. dollar, which typically trades inversely to oil, to a three-month high against a basket of currencies.

The dollar index rose as high as 105.65, up 1.3% on Tuesday and the highest since Dec. 6.

Reporting by Laila Kearney in New York and Jeslyn Lerh in Singapore; Editing by Sonali Paul

Our standards: Thomson Reuters Trust Principles.

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