Oil rose on Wednesday as a report of lower inventories in the United States and cuts in Russian gas flows to Europe offset concern about weaker demand and a looming U.S. interest rate hike.
Industry group the American Petroleum Institute said on Tuesday crude stocks fell by 4 million barrels, four times the forecast decline. The Energy Information Administration’s official figures are out at 1430 GMT.
“Coupled with the Fed decision on interest rates, today is sure to be a heavy U.S.-centric session,” said Stephen Brennock of oil broker PVM.
U.S. West Texas Intermediate (WTI) crude gained 70 cents, or 0.73%, to $96.08.
“It looks the more vulnerable from a technical perspective, and a large gain by official U.S. crude inventories tonight could spark more selling,” said Singapore-based analyst Jeffrey Halley of brokerage OANDA, referring to WTI.
Oil has soared in 2022, reaching a 14-year high of $139 a barrel in March after Russia’s invasion of Ukraine added to supply worries and as demand recovered from the pandemic.
Since then, concerns of economic slowdown and rising interest rates have weighed, despite supply outages in Libya and Nigeria and cuts in Russian gas flows to Europe.
Gas flows through the Nord Stream 1 pipeline fell to a fifth of the pipeline’s capacity on Wednesday, while Italy’s Eni said it will receive lower volumes from Russia’s Gazprom.
Later on Wednesday the U.S. Federal Reserve is expected to announce an aggressive rate rise of 75 basis points, a prospect that analysts said was limiting the rally.
A large rate hike would add to concern about the demand outlook and a stronger dollar, which would make dollar-denominated commodities more expensive for other currency holders.