Oil prices rose on Wednesday on expectations of strong global demand, including in the world’s top consumer the United States, and as even somewhat sticky U.S. inflation did not significantly alter expectations the Fed might start cutting rates soon.
Brent futures for May delivery rose 46 cents, or 0.6%, to $82.38 a barrel by 0400 GMT. April U.S. West Texas Intermediate crude contract gained 47 cents, or 0.6%, to$78.03.
The Organization of the Petroleum Exporting Countries stuck to its forecast of a strong oil demand growth globally of 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025 and raised its economic growth forecast for this year.
In another indication of healthy demand, U.S. crude oil inventories and fuel inventories fell last week, according to market sources citing American Petroleum Institute figures.
Analysts still believe the Federal Reserve may start cutting rates in the summer despite U.S. consumer prices rising solidly in February on higher costs for gasoline and shelter, suggesting some stickiness in inflation. Lower rates support oil demand.
“The risk environment has largely stayed unfazed, riding on the firm belief that current market pricing for a rate cut only in June will do the job,” said Yeap Jun Rong, market strategist at IG.
The unexpected slide in U.S. crude inventories and strong growth forecasts by OPEC also supported prices, said Yeap.
In a note to clients, analysts at Capital Economics said they still forecast the Fed to start easing policy “around June.”
Oil prices were under pressure in the previous session after the U.S. Energy Information Administration raised domestic oil output forecast but declines were limited on expectations that OPEC+ output cuts will still slow global oil growth and on the recent wave of drone attacks on Russia, including refineries.
(Reporting by Katya Golubkova in Tokyo and Jeslyn Lerh in Singapore; Editing by Lincoln Feast and Shri Navaratnam)