June 14, 2023 (MLN): Oil prices rose on Wednesday attributed to the U.S. decision to purchase 12 million barrels of oil in 2023, strategically aimed at boosting reserves.
Brent crude is currently trading at $74.62 per barrel, up by 0.80% on the day.
While West Texas Intermediate crude (WTI) is trading at $69.83 per barrel, up by 0.65% on the day.
Yesterday, both benchmarks, Brent and WTI marked a rise of 2.78% and 2.91% respectively.
The U.S. consumer price index (CPI) for the month of May 2023 clocked in at 4% YoY, compared to 4.9% YoY in April.
This is below analysts’ expectations of 4.1% in May, indicating a moderation of inflationary pressures.
Meanwhile, Government data on stockpiles is due later in the day.
OPEC+ has granted Russia a slightly higher oil production baseline, meaning Russia can produce more under the latest quotas than previously agreed.
China, the world's biggest crude importer, lowered the short-term lending rate for the first time in 10 months on Tuesday, in a bid to restore market confidence and prop up a stalling post-pandemic recovery.
Whereas, the European Central Bank is expected to hike interest rates by another quarter percentage point on Thursday to tame stubborn inflation, as Reuters reported.
Market participants are now closely monitoring the upcoming Federal Reserve open committee figures for June due to be released on Wednesday.
CME FedWatch Tool is pricing an 89.6% chance of interest rates pause at the meeting today at 11:00 PM.
Federal Reserve Chair Jerome Powell to deliver speech at 11:30 PM.
Rate hikes strengthen the dollar, making commodities denominated in the U.S. currency more expensive for holders of other currencies, and weigh on oil prices.
A pause in hikes would spur economic growth and oil demand, supporting prices.
