- 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 fell in the previous session on fears that more aggressive U.S. interest rate hikes would hit demand.
Brent crude futures were up 18 cents, or 0.2%, at $83.47 a barrel by 0452 GMT, while US West Texas Intermediate (WTI) crude futures were up 4 cents at $77.62 a barrel.
Data from the American Petroleum Institute showed that US crude inventories fell by about 3.8 million barrels in the week ended March 3, according to market sources. The drawdown defied forecasts for a 400,000-barrel rise in crude stocks from nine analysts polled by Reuters.
However, short-term drivers pointed to a more bearish outlook as investors braced for steeper US interest rate hikes.
“Fed Chairman Powell’s comments about ‘higher for longer’ interest rates spooked the markets and sent risk assets, including commodities, sharply lower overnight. The brief rally in oil prices today may be due to profit-taking as nothing fundamental has changed,” says Tina Teng. , an analyst at CMC Markets.
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Traders awaited crude stockpiles data from the US Energy Information Administration later on Wednesday, after API data showed a decline in crude stockpiles for the first time after a 10-week rally, she added.
Both Brent and WTI fell more than 3% on Tuesday following 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 recent strong data.
“This raised concerns about weaker US demand,” ANZ Research analysts said in a note to clients.
Powell’s comments sent the US dollar, which normally trades inversely with 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
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