Oil prices hit four-week high ahead of Powell testimony

March 07, 2023 (MLN): Oil prices continued to rise on Monday, hitting a four-week high, as investors waited for comments from Federal Reserve Chair Jerome Powell.

Brent crude oil remained unchanged at $86.1 a barrel, which is the highest level seen since mid-February.

Investors are said to be sitting tight ahead of two days of testimony from Powell, as they anticipate higher-for-longer interest rates. U.S. economic data has remained robust, which has led many investors to believe that further rate hikes are necessary. Powell's appearance is being viewed as an opportunity for him to shape financial market expectations.

According to a note from UniCredit, "We expect Mr. Powell to reiterate that further rate hikes are needed and, if the data were to continue to surprise to the upside, the peak rate would likely need to be higher than the central bank had previously expected."

Many experts believe that the Federal Reserve is likely to continue raising interest rates in the coming months, as the U.S. economy continues to show signs of strength. Some have even speculated that the central bank may need to raise rates more quickly than expected if economic growth continues to outpace forecasts.

The rise in oil prices is being attributed to the strength of the U.S. economy, as well as the ongoing tensions between the U.S. and Iran. Iran has threatened to block the Strait of Hormuz, which is a key shipping route for oil if the U.S. continues to impose sanctions on its oil exports.

Overall, investors are keeping a close eye on Powell's comments, as they look for clues about the future direction of U.S. interest rates. Many are hoping that Powell will provide some reassurance about the health of the U.S. economy, while also providing clarity on the central bank's plans for interest rates in the coming months.

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